Dave Emory’s entire life­time of work is avail­able on a flash drive that can be obtained here. The new drive is a 32-gigabyte drive that is current as of the programs and articles posted by late spring of 2015. The new drive (available for a tax-deductible contribution of $65.00 or more) contains FTR #850.

WFMU-FM is podcasting For The Record–You can subscribe to the podcast HERE.

Introduction: Some folks just don’t play well with others. Sadly, terrifyingly and tragically, that applies to many key players in the world of Big Tech.

Supplementing discussion presented in FTR #859, we reiterate the introduction to that broadcast.

Albert Einstein said of the invention of the atomic bomb: “Everything has changed but our way of thinking.” We feel that other, more recent developments in the world of Big Tech warrant the same type of warning.

This program further explores the Brave New World being midwived by technocrats. These stunning developments should be viewed against the background of what we call “technocratic fascism,” referencing a vitally important article by David Golumbia.” . . . . Such tech­no­cratic beliefs are wide­spread in our world today, espe­cially in the enclaves of dig­i­tal enthu­si­asts, whether or not they are part of the giant corporate-digital leviathan. Hack­ers (“civic,” “eth­i­cal,” “white” and “black” hat alike), hack­tivists, Wik­iLeaks fans [and Julian Assange et al–D. E.], Anony­mous “mem­bers,” even Edward Snow­den him­self walk hand-in-hand with Face­book and Google in telling us that coders don’t just have good things to con­tribute to the polit­i­cal world, but that the polit­i­cal world is theirs to do with what they want, and the rest of us should stay out of it: the polit­i­cal world is bro­ken, they appear to think (rightly, at least in part), and the solu­tion to that, they think (wrongly, at least for the most part), is for pro­gram­mers to take polit­i­cal mat­ters into their own hands. . . First, [Tor co-creator] Din­gle­dine claimed that Tor must be sup­ported because it fol­lows directly from a fun­da­men­tal “right to pri­vacy.” Yet when pressed—and not that hard—he admits that what he means by “right to pri­vacy” is not what any human rights body or “par­tic­u­lar legal regime” has meant by it. Instead of talk­ing about how human rights are pro­tected, he asserts that human rights are nat­ural rights and that these nat­ural rights cre­ate nat­ural law that is prop­erly enforced by enti­ties above and out­side of demo­c­ra­tic poli­ties. Where the UN’s Uni­ver­sal Dec­la­ra­tion on Human Rights of 1948 is very clear that states and bod­ies like the UN to which states belong are the exclu­sive guar­an­tors of human rights, what­ever the ori­gin of those rights, Din­gle­dine asserts that a small group of soft­ware devel­op­ers can assign to them­selves that role, and that mem­bers of demo­c­ra­tic poli­ties have no choice but to accept them hav­ing that role. . . Fur­ther, it is hard not to notice that the appeal to nat­ural rights is today most often asso­ci­ated with the polit­i­cal right, for a vari­ety of rea­sons (ur-neocon Leo Strauss was one of the most promi­nent 20th cen­tury pro­po­nents of these views). We aren’t sup­posed to endorse Tor because we endorse the right: it’s sup­posed to be above the left/right dis­tinc­tion. But it isn’t. . . .”

Underscoring the “anarcho-fascist” nature of technocratic fascism, the broadcast notes how crypto-currencies offer the possibility of, what for lack of a better term, might be called “cyber-offshoring.” Going the Cayman Islands and other offshore tax havens one better, crypto-currency offers the possibility of sociopathic economic elites collapsing the nation state by subverting revenue collection. This is the fiscal wet dream of the economic elites that dominate right-wing ideology. “No Taxes!”

” . . . Governments initially attempting to control cryptocurrency taxation through the businesses and bottlenecks which it can be monitored through will meet with as much success as they have limiting file sharing, illegal downloads, and Tor operations. Cryptocurrencies have an inherent regulation, that of the law from number. Truly, bitcoin is code as law. . . .”

Continuing to explore the technological aspect of corporatist ideology, we note that Target stores responded to a vote by their pharmacists to unionize by introducing a new commitment to robot workers. (This is reminiscent of a threat to replace fast-food workers with “apps,” if they try to obtain a higher minimum wage.)

Next, we recap an important article highlighted in FTR #851. A Bitcoin-inspired technologydeveloped by Ethereum appears set to engender a number of appalling possibilities, including: the anonymous, online funding of the assassination of public officials; the anonymous sabotaging and vandalizing of websites and last, but certainly not least, the replacement of third-party human administrators, such as lawyers with code. It won’t just be fast-food workers and low-wage employees at places like Target who lose their jobs to high-tech automation!

” . . . . How­ever, Wood acknowl­edges it is likely that Ethereum will be used in ways that break the law—and even says that is part of what makes the tech­nol­ogy inter­est­ing. Just as file shar­ing found wide­spread unau­tho­rized use and forced changes in the enter­tain­ment and tech indus­tries, illicit activ­ity enabled by Ethereum could change the world, he says.

“The poten­tial for Ethereum to alter aspects of soci­ety is of sig­nif­i­cant mag­ni­tude,” says Wood. “This is some­thing that would pro­vide a tech­ni­cal basis for all sorts of social changes and I find that exciting.” . . . .

. . . . “You can imple­ment any Web ser­vice with­out there being a legal entity behind it,” he says. “The idea of mak­ing cer­tain things impos­si­ble to leg­is­late against is really interesting.”

In that same context, major financial institutions implicated in the shenanigans that brought about the financial collapse of 2008, as well as the Libor rigging scandal have launched the Symphony messaging system, which may prove opaque to regulators.

State-of-the-art facial recognition software deployed by the wildly popular Facebook threatens privacy in unprecedented ways. People should be far more worried about Facebook–with 1.5 billion users–than of the NSA. QUICK: How much influence do YOU have in what Facebook does?!

The program concludes with a look at Indian Premier Narendra Modi’s courting of Silicon Valley companies, including Zuckerberg’s Facebook.

His political CV is inextricably linked with the operations, development and history of the RSS, political parent to his BJP Party. The RSS is a Hindu nationalist and fascist party, one of whose alumni assassinated Mahatma Gandhi.

Recent developments have clarified the degree of control and influence that the RSS exerts on Modi. That control is profound and direct.

” . . . . Such tech­no­cratic beliefs are wide­spread in our world today, espe­cially in the enclaves of dig­i­tal enthu­si­asts, whether or not they are part of the giant corporate-digital leviathan. Hack­ers (“civic,” “eth­i­cal,” “white” and “black” hat alike), hack­tivists, Wik­iLeaks fans [and Julian Assange et al–D. E.], Anony­mous “mem­bers,” even Edward Snow­den him­self walk hand-in-hand with Face­book and Google in telling us that coders don’t just have good things to con­tribute to the polit­i­cal world, but that the polit­i­cal world is theirs to do with what they want, and the rest of us should stay out of it: the polit­i­cal world is bro­ken, they appear to think (rightly, at least in part), and the solu­tion to that, they think (wrongly, at least for the most part), is for pro­gram­mers to take polit­i­cal mat­ters into their own hands. . . First, [Tor co-creator] Din­gle­dine claimed that Tor must be sup­ported because it fol­lows directly from a fun­da­men­tal “right to pri­vacy.” Yet when pressed—and not that hard—he admits that what he means by “right to pri­vacy” is not what any human rights body or “par­tic­u­lar legal regime” has meant by it. Instead of talk­ing about how human rights are pro­tected, he asserts that human rights are nat­ural rights and that these nat­ural rights cre­ate nat­ural law that is prop­erly enforced by enti­ties above and out­side of demo­c­ra­tic poli­ties. Where the UN’s Uni­ver­sal Dec­la­ra­tion on Human Rights of 1948 is very clear that states and bod­ies like the UN to which states belong are the exclu­sive guar­an­tors of human rights, what­ever the ori­gin of those rights, Din­gle­dine asserts that a small group of soft­ware devel­op­ers can assign to them­selves that role, and that mem­bers of demo­c­ra­tic poli­ties have no choice but to accept them hav­ing that role. . . Fur­ther, it is hard not to notice that the appeal to nat­ural rights is today most often asso­ci­ated with the polit­i­cal right, for a vari­ety of rea­sons (ur-neocon Leo Strauss was one of the most promi­nent 20th cen­tury pro­po­nents of these views). We aren’t sup­posed to endorse Tor because we endorse the right: it’s sup­posed to be above the left/right dis­tinc­tion. But it isn’t. . . .”

1b. Potentially realizing the economic wet dream of fascist/libertarian elements, cryptocurrency may subvert the ability of nation states to tax–a function central to the very concept of civic existence! (We discussed Bitcoin, in FTR #’s 760, 764, 770, 785.)

As the age of cryptocurrency comes into full force, it will facilitate a subversively viable taxation avoidance strategy for many of the technically savvy users of peer-to-peer cryptographic payment systems. In doing so, cryptocurrency use will act to erode the tax revenue base of national jurisdictions, and ultimately, reposition taxation as a voluntary, pay-for-performance function. In this post, I’d like to cover some of the benefits such a strategy will have for cryptocurrency investors, why our notion of taxation is ripe for disruption, and why cryptocurrency taxation is enabled by default.

Although investors have been lured by the siren song of tax havens for as long as governments have existed, none have existed with the legal and structural characteristics such as those found in cryptocurrency. By operating behind a veil of cybersecrecy, it is reasonable to forecast the impracticality of systemic taxation on these types of financial assets from national jurisdictions. Individual enforcement of taxation is likewise impractical due to ideological backlash governments would receive for targeting individuals who avoid national taxation via information technologies. Even so, many jurisdictions have already declared digital currency transactions (something which occurs between consenting parties on a network which no one owns) to be taxable under current legal frameworks.

How can the state lay claim to the right to tax that which they do not issue and cannot control?

Running The Numbers on Cryptocurrency Taxation

It has been said that compounding interest is one of the most powerful forces in the universe. When we apply the black magic of compounding returns to the profit-maximizing actions of consumers, we see quite clearly why every user aware of the benefits of using cryptocurrency, even if only for the tax-savings, will opt to do so over traditional fiat money. The allure of avoiding the clutches of national taxation is strong enough that any rational consumer will make cryptocurrency a portion of their financial portfolio given they have the sufficient technical understanding.

James Dale Davidson, co-editor of Strategic Investment

“Each $5,000 of annual tax payments made over a 40-year period reduces your net worth by $2.2 million assuming a 10% annual return on your investments,” reports James Dale Davidson in The Sovereign Individual: Mastering the Transition to the Information Age, “For high income earners in predatory tax regimes (such as the United States), you can expect to lose more of your money through cumulative taxation than you will ever earn.”

As we explained in the report Bitcoin May Become A Global Reserve Instrument, never before has there existed a tool that can preserve economic and informational assets with such a high degree of security combined with a near-zero marginal cost to the user. This revolutionary capability of the bitcoin network does, and will continue to provide, a subversively lucrative tax super haven in direct correlation with its acceptance on a worldwide basis.

Government Response to Cryptocurrency Taxation

Many government agencies have already cued in to the tax avoidance potential of bitcoin and cryptocurrencies. However, it would seem that they misjudge this emerging threat looming over their precious tax coffers. The Financial Crimes Enforcement Network in the United States (FINCEN) for example, has already issued guidance on cryptocurrency taxation, yet makes a false distinction between real currency and virtual currency. FINCEN states that “In contrast to real currency, “virtual” currency is a medium of exchange that operates like a currency in some environments, but does not have all the attributes of real currency,” and later “virtual currency does not have legal tender status in any jurisdiction.” What these agencies fail to realize, is that cryptocurrency is not virtual in any sense of the word. Indeed it is as real, and perhaps even more real, than traditional fleeting fiat currencies.

Bitcoin and cryptocurrency offer a near perfect alternative to traditional tax havens which are being tightly controlled by the new laws associated with the Foreign Account Tax Compliance Act (FATCA). In his report Are Cryptocurrencies Super Tax Havens?, Omri Marian makes clear the pressure for financial institutions who interact with the US banking system to hand over account holders, and for a crackdown on offshore tax havens with the enactment of FATCA in 2010.

Tax policymakers seem to be operating under the faulty assumption that cryptocurrency-based economies are limited by the size of virtual economies. The only virtual aspect of cryptocurrencies, however, is their form. Their operation happens within real economies, and as such their growth potential is, at least theoretically, infinite. Such potential, together with recent developments in cryptocurrencies markets, should alert policy-makers to the urgency of the emerging problem.

– Omri Marian, Are Cryptocurrencies Super Tax Havens?

Current payment processors such as BitPay have recently revealed that government agencies are watching cryptocurrency transactions through the bottlenecks and exchanges where it can be tracked and traced with a high degree of transparency. It should not come to anyones surprise that governments are watching cryptocurrency nor that companies are complying with their laws, but understanding why national governments require users of the bitcoin digital economy to cut them a slice of the pie while they contribute nothing to the operation, and in many cases, hinder the adoption of this technology, remains a callus mystery.

Governments initially attempting to control cryptocurrency taxation through the businesses and bottlenecks which it can be monitored through will meet with as much success as they have limiting file sharing, illegal downloads, and Tor operations. Cryptocurrencies have an inherent regulation, that of the law from number. Truly, bitcoin is code as law.

Old laws seldom resist the trends of technology. The attempt of government agencies to levy taxation on cryptocurrency transactions directly is as futile as sweeping back waves of the ocean. No matter the size of broom, state actors will be overrun by continuously expanding waves of cryptocurrency adoption.

In the 1980s, it was illegal in the United States to send a fax message. The US Post Office considered faxes to be first-class mail, over which the US Post Office claimed an ancient monopoly … billions of fax messages later, it is unclear whether anyone ever complied with that law.

– James Dale Davidson, William Rees-Mogg, The Sovereign Individual

Cryptocurrency Taxation By Default

What would you say if you were told cryptocurrency taxation occurs on every transaction by default? In the realm of digital currency, the transaction fee which the user decides to (or decides not to) attach to each payment represents the taxation. This user can decide to attach a large fee or no fee at all. In doing so, the miners of the network will choose preference for the transactions with a larger fee attached, and will work to confirm these payments sooner than those with smaller fees. This transactions queue represents a voluntary, pay-for-performance taxation structure where the performance derived from the system is dependent upon how much taxation they pay.

Algorithmic Regulation

Cryptocurrencies have regulation built into the very nature of their existence, just not through our conventional ideas of human intervention. Because of the technological nature of cryptocurrency taxation, judicial regulations bestowed upon these types of systems will always be, to a large degree, futile. Cryptocurrencies have established their own set of rules and guidelines through the source code they are built upon, forcing legal frameworks on this type of 21st century innovation will only cause friction during its adoption phase.

The only choice of regulation we have in terms of cryptocurrency taxation is not to try and fit it inside some existing doctrine, but to abide by their laws of finance and information freedom. We must be the one’s to conform to the regulation, not have it conform to our conventional beliefs. Bitcoin is a system which will only be governed effectively through digital law, an approach which functions solely through a medium of technology itself. It will not bend to the whim of those who still hold conventional forms of law-making as relevant today.

For a successful technology, reality must take precedence over public relations, for nature cannot be fooled.

– Richard Feynman

Conclusion

When we come to understand the systemic resilience to judicial intervention, it becomes quite clear that cryptocurrency taxation will remain a voluntary, pay-for-performance function of the network itself. No longer will taxation be enforced through coercion, but become a voluntary act towards increased system performance.

Make no mistake, in a crypto-anarchist jurisdiction where there is no means to confiscate or control property on behalf of another individual, the need for the state will cease to exist. Mass taxation on digital currency is not feasible through judicial enforcement while individual enforcement is bound to prove ineffective. You, or anyone motivated to retain their net worth, will find a subversively lucrative tax haven in the realm of cryptocurrency.

3a. A harbinger of things to come: if you want to unionize, you may be replaced by technology.

Just a day after pharmacy workers from a Brooklyn Target store formed a union, the company announced plans to replace employees with robot workers in the near future.

Last week it was reported that the pharmacists had submitted their initial “microunion” filing with the National Labor Relations Board after an initial ballot vote was passed 7 -2. The filing was noteworthy as the workers become the first union at any Target store since the retailer opened in 1902.

Yet, less than a week later, in a seemingly unrelated press release, Casey Carl, the Chief Technology and Strategy Officer at Target announced the company’s plan to develop automation systems and replace workers with robots in their retail locations as part of a new program with Techstars, an industry leader with a reputation for accelerating startups.

“We know that technology will continue to revolutionize retail, and that Target’s future will be built on innovation. That’s why we’re so excited to partner with Techstars and invite the world’s most promising startups to work with Target right in our backyard.”

For the last few years, Target has been increasing their share of the e-commerce sector since taking back control of their digital fulfillment from Amazon, which also uses robot workers. But now, they are looking to integrate that portion of their business with their brick and mortar locations to create a speedy grocery delivery service, which will require an even greater investment in technology.

That, combined with groups and politicians working towards a $15 per hour minimum wage, has pushed Target to announce that within two years they will have a “concept store” open that will include robots instead of associates.

Large corporations such as McDonald’s and Wal-Mart have been using the threat of “automated workers” for years to keep wages low and suppress union growth within their stores, but have so far been unsuccessful in automating the “customer service” portion of their operations.

3b. The rise of “smart contracts” may not only enable the successful perpetration of numerous kinds of criminal undertakings, including the assassination of public officials, but may replace the use of attorneys to draft contracts. It is not only low-wage workers who face unemployment realized through technological replacement! Actually, Bitcoin’s Dark Side is pretty damn dark, as we saw in FTR #’s 760, 764, 770, 785.

Investors see riches in a cryptography-enabled tech­nol­ogy called smart contracts–but it could also offer much to criminals.

Some of the ear­li­est adopters of the dig­i­tal cur­rency Bit­coin were crim­i­nals, who have found it invalu­able in online mar­ket­places for con­tra­band and as pay­ment extorted through lucra­tive “ran­somware” that holds per­sonal data hostage. A new Bitcoin-inspired tech­nol­ogy that some investors believe will be much more use­ful and pow­er­ful may be set to unlock a new wave of crim­i­nal innovation.

That tech­nol­ogy is known as smart contracts—small com­puter pro­grams that can do things like exe­cute finan­cial trades or nota­rize doc­u­ments in a legal agree­ment. Intended to take the place of third-party human admin­is­tra­tors such as lawyers, which are required in many deals and agree­ments, they can ver­ify infor­ma­tion and hold or use funds using sim­i­lar cryp­tog­ra­phy to that which under­pins Bitcoin.

Some com­pa­nies think smart con­tracts could make finan­cial mar­kets more effi­cient, or sim­plify com­plex trans­ac­tions such as prop­erty deals (see “The Startup Meant to Rein­vent What Bit­coin Can Do”). Ari Juels, a cryp­tog­ra­pher and pro­fes­sor at the Jacobs Technion-Cornell Insti­tute at Cor­nell Tech, believes they will also be use­ful for ille­gal activity–and, with two col­lab­o­ra­tors, he has demon­strated how.

“In some ways this is the per­fect vehi­cle for crim­i­nal acts, because it’s meant to cre­ate trust in sit­u­a­tions where oth­er­wise it’s dif­fi­cult to achieve,” says Juels.

In a paper to be released today, Juels, fel­low Cor­nell pro­fes­sor Elaine Shi, and Uni­ver­sity of Mary­land researcher Ahmed Kosba present sev­eral exam­ples of what they call “crim­i­nal con­tracts.” They wrote them to work on the recently launched smart-contract plat­form Ethereum.

One exam­ple is a con­tract offer­ing a cryp­tocur­rency reward for hack­ing a par­tic­u­lar web­site. Ethereum’s pro­gram­ming lan­guage makes it pos­si­ble for the con­tract to con­trol the promised funds. It will release them only to some­one who pro­vides proof of hav­ing car­ried out the job, in the form of a cryp­to­graph­i­cally ver­i­fi­able string added to the defaced site.

Con­tracts with a sim­i­lar design could be used to com­mis­sion many kinds of crime, say the researchers. Most provoca­tively, they out­line a ver­sion designed to arrange the assas­si­na­tion of a pub­lic fig­ure. A per­son wish­ing to claim the bounty would have to send infor­ma­tion such as the time and place of the killing in advance. The con­tract would pay out after ver­i­fy­ing that those details had appeared in sev­eral trusted news sources, such as news wires. A sim­i­lar approach could be used for lesser phys­i­cal crimes, such as high-profile vandalism.

“It was a bit of a sur­prise to me that these types of crimes in the phys­i­cal world could be enabled by a dig­i­tal sys­tem,” says Juels. He and his coau­thors say they are try­ing to pub­li­cize the poten­tial for such activ­ity to get tech­nol­o­gists and pol­icy mak­ers think­ing about how to make sure the pos­i­tives of smart con­tracts out­weigh the negatives.

“We are opti­mistic about their ben­e­fi­cial appli­ca­tions, but crime is some­thing that is going to have to be dealt with in an effec­tive way if those ben­e­fits are to bear fruit,” says Shi.

Nico­las Christin, an assis­tant pro­fes­sor at Carnegie Mel­lon Uni­ver­sity who has stud­ied crim­i­nal uses of Bit­coin, agrees there is poten­tial for smart con­tracts to be embraced by the under­ground. “It will not be sur­pris­ing,” he says. “Fringe busi­nesses tend to be the first adopters of new tech­nolo­gies, because they don’t have any­thing to lose.”

…

Gavin Wood, chief tech­nol­ogy offi­cer at Ethereum, notes that legit­i­mate busi­nesses are already plan­ning to make use of his technology—for exam­ple, to pro­vide a dig­i­tally trans­fer­able proof of own­er­ship of gold.

How­ever, Wood acknowl­edges it is likely that Ethereum will be used in ways that break the law—and even says that is part of what makes the tech­nol­ogy inter­est­ing. Just as file shar­ing found wide­spread unau­tho­rized use and forced changes in the enter­tain­ment and tech indus­tries, illicit activ­ity enabled by Ethereum could change the world, he says.

“The poten­tial for Ethereum to alter aspects of soci­ety is of sig­nif­i­cant mag­ni­tude,” says Wood. “This is some­thing that would pro­vide a tech­ni­cal basis for all sorts of social changes and I find that exciting.”

For exam­ple, Wood says that Ethereum’s soft­ware could be used to cre­ate a decen­tral­ized ver­sion of a ser­vice such as Uber, con­nect­ing peo­ple want­ing to go some­where with some­one will­ing to take them, and han­dling the pay­ments with­out the need for a com­pany in the mid­dle. Reg­u­la­tors like those har­ry­ing Uber in many places around the world would be left with noth­ing to tar­get. “You can imple­ment any Web ser­vice with­out there being a legal entity behind it,” he says. “The idea of mak­ing cer­tain things impos­si­ble to leg­is­late against is really interesting.”

4. Sym­phony, Wall Street’s fancy new bank-to-bank mes­sag­ing sys­tem that sports super-encryption even the gov­ern­ment can’t break, just went live. And they did so only after com­ing to an agree­ment with the New York Depart­ment of Finan­cial Ser­vices over con­cerns that Symphony’s clients were going to be hid­ing incrim­i­nat­ing evi­dence from reg­u­la­tors: Sym­phony agrees to keep copies of client mes­sages for seven years. Addi­tion­ally, for four banks — Gold­man Sachs, Deutsche Bank, Credit Suisse and Bank of New York Mel­lon — that are both investors in Sym­phony and, in most cases, per­pe­tra­tors of the giant Libor-rigging car­tel arranged via a chat sys­tem, they also have to give copies of their encryp­tion keys to an inde­pen­dent custodian.

So with those safe­guards in place, Wall Street’s con­trolled infor­ma­tion black hole is now a real­ity:

Sym­phony, the secure mes­sag­ing com­pany backed by 15 Wall Street banks, will launch on Tues­day after ham­mer­ing out a deal with a reg­u­la­tory agency that once threat­ened to shut down the first real chal­lenge to the Bloomberg Terminal.

Three years in the mak­ing, Sym­phony was born out of des­per­a­tion among the world’s most pow­er­ful finan­cial firms and invest­ment houses to break free of Bloomberg’sstran­gle­hold on finan­cial soft­ware, data and news. Long before peo­ple used Face­book, MySpace, Twit­ter or AOL Instant Mes­sen­ger, finan­cial pro­fes­sion­als depended on the ter­mi­nal to chat with and keep track of one another. Today, the ter­mi­nal con­fers sta­tus and priv­i­lege to the more than 325,000 finan­cial pros who pay $24,000 a year to use it.

Symphony’s cloud-based mes­sag­ing ser­vice does two things: It uses advanced encryp­tion tech­niques in order to keep sen­si­tive mes­sages — instant mes­sages mostly — locked up and out of the hands of hack­ers. But since it’s designed for finan­cial com­pa­nies, which are required by law to keep copies of their mes­sages for sev­eral years in case reg­u­la­tors or law enforce­ment ever needs them for an inves­ti­ga­tion, it has also been designed to work in con­cert with what­ever com­pli­ance tools those com­pa­nies have in place.

So when the New York Depart­ment of Finan­cial Ser­vices raised sus­pi­cions over the sum­mer that banks might use Symphony’s encryp­tion tech­nol­ogy to avoid the pry­ing eyes of reg­u­la­tors, it seemed plau­si­ble that the com­pany could face restric­tions on how it does business.

That didn’t happen. Instead, on Mon­day Sym­phony announced a deal with the DFS under which it agreed to store for seven years copies of mes­sages that its clients send on the ser­vice. Addi­tion­ally, four banks (Gold­man Sachs, Deutsche Bank, Credit Suisse and Bank of New York Mel­lon) which are both cus­tomers of and investors in Sym­phony agreed to turn over copies of their encryp­tion keys to an inde­pen­dent cus­to­dian. When a reg­u­la­tor wants to review encrypted mes­sages, they will be able to decrypt them upon request.

“The agree­ment is another pos­i­tive devel­op­ment on the eve of Symphony’s launch,” the com­pany said in a state­ment emailed to Re/code. “Symphony’s plat­form safe­guards against cyber-threats while strength­en­ing cus­tomers’ com­pli­ance oper­a­tions and facil­i­tat­ing their abil­ity to meet their reg­u­la­tory oblig­a­tions. Sym­phony can store data securely for as long as its cus­tomers request, and its end-to-end encryp­tion ensures mes­sages are secure. Sym­phony pro­vides state-of-the-art cyber-security for insti­tu­tions oper­at­ing in com­plex reg­u­la­tory environments.”

It’s not entirely the end of the reg­u­la­tory road for Sym­phony: Over the sum­mer Sen. Eliz­a­beth War­ren wrote a let­ter to fed­eral reg­u­la­tors express­ing wor­ries sim­i­lar to those of DFS, and there are ques­tions pend­ing too from inter­na­tional reg­u­la­tory bod­ies. But none of them are espe­cially wor­ry­ing to CEO David Gurle.

“We’ve engaged in a series of meet­ings with reg­u­la­tors where we demon­strate that we have capa­bil­i­ties that can be used by reg­u­la­tors to carry out any kind of inves­ti­ga­tion they may want to do,” he told Re/code in an inter­view ear­lier this month. “What we do enhances the abil­ity of our clients to meet their legal and reg­u­la­tory oblig­a­tions, but it also gives them the added ben­e­fit of secure communications.”

…

It’s not entirely the end of the reg­u­la­tory road for Sym­phony: Over the sum­mer Sen. Eliz­a­beth War­ren wrote a let­ter to fed­eral reg­u­la­tors express­ing wor­ries sim­i­lar to those of DFS, and there are ques­tions pend­ing too from inter­na­tional reg­u­la­tory bod­ies. But none of them are espe­cially wor­ry­ing to CEO David Gurle.
…

5. Facebook’s facial recognition software continues to be a source of controversy and litigation. Bear in mind that Facebook is also developing apps that permit people’s smart phones to be turned on remotely, in order to monitor the type of music they (and their friends and associates) enjoy. They are also implementing an app that will permit financial institutions to deny people credit on the basis of the credit-worthiness of their friends and associates!

Who owns your face? Believe it or not, the answer depends on which state you live in, and chances are, you live in one that hasn’t even weighed in yet.

That could soon change. For the fourth time this year, Face­book Inc. was hit with a class-action law­suit by an Illi­nois res­i­dent who says its face-recognition soft­ware vio­lates an unusual state pri­vacy law there. The lat­est com­plaint, filed Mon­day, under­scores a quiet but high-stakes legal bat­tle for the social net­work­ing giant, one that could rever­ber­ate through­out the rest of the U.S. tech indus­try and much of the pri­vate sector.

With almost 1.5 bil­lion active users, Face­book has amassed what prob­a­bly is the world’s largest pri­vate data­base of “faceprints,” dig­i­tal scans that con­tain the unique geo­met­ric pat­terns of its users’ faces. The com­pany says it uses these iden­ti­fiers to auto­mat­i­cally sug­gest photo tags. When users upload new pic­tures to the site, an algo­rithm cal­cu­lates a numeric value based on a person’s unique facial fea­tures. Face­book pitches the fea­ture as just another con­ve­nient way to stay con­nected with friends, but pri­vacy and civil rights advo­cates say the data gen­er­ated by face-recognition tech­nol­ogy is uniquely sen­si­tive, and requires extra spe­cial safe­guards as it finds its way into the hands of pri­vate companies.

“You can’t turn off your face,” said Alvaro M. Bedoya, found­ing exec­u­tive direc­tor of George­town University’s Cen­ter on Pri­vacy & Tech­nol­ogy. “Yes, it’s 2015, and yes, we’re tracked in a mil­lion dif­fer­ent ways, but for most of those forms of track­ing, I can still turn it off if I want to.”

Faceprints Are Mostly Unregulated

Cur­rently, there are no com­pre­hen­sive fed­eral reg­u­la­tions gov­ern­ing the com­mer­cial use of bio­met­rics, the cat­e­gory of infor­ma­tion tech­nol­ogy that includes faceprints. And Bedoya said the gov­ern­ment appears to be in no hurry to address the issue.

Ear­lier this year, the Cen­ter on Pri­vacy & Tech­nol­ogy was one of a num­ber of privacy-rights groups — along with the Elec­tronic Fron­tier Foun­da­tion and the Amer­i­can Civil Lib­er­ties Union, among oth­ers — that with­drew from dis­cus­sions on how to craft guide­lines for face-recognition tech­nol­ogy. After months of nego­ti­a­tions, Bedoya said the groups grew frus­trated by tech indus­try trade asso­ci­a­tions that would not agree to even the most min­i­mal of pro­tec­tions, includ­ing a rule that would require com­pa­nies to obtain writ­ten con­sent before col­lect­ing and stor­ing faceprints on consumers.

“When not a sin­gle trade asso­ci­a­tion would agree to that, we just real­ized we weren’t deal­ing with peo­ple who were there to nego­ti­ate,” Bedoya said. “We were there to deal basi­cally with peo­ple who wanted to stop the process, or make it some­thing that was watered down.”

But Illi­nois is dif­fer­ent. It’s one of only two states — the other being Texas — to reg­u­late bio­met­rics in the pri­vate sec­tor. Illi­nois passed its Bio­met­ric Infor­ma­tion Pri­vacy Actin 2008, back when Face­book was still in its rel­a­tive infancy and most com­pa­nies were not think­ing about face-recognition technology.

“I think we were ahead of the curve,” said Mary Dixon, leg­isla­tive direc­tor for the ACLU of Illi­nois, which advanced the ini­tia­tive. “I think it’d be hard to pass sim­i­lar ini­tia­tives now given the intense lobby against some of the pro­tec­tions we were able to advance.”

Lit­i­ga­tion Faceoff

Illi­nois’ law went pretty much unno­ticed until April of this year, when a high-profile pri­vacy lawyer filed a law­suit in fed­eral court on behalf of a Face­book user who charges that Face­book is col­lect­ing and stor­ing faceprints on its users with­out obtain­ing informed writ­ten con­sent, a vio­la­tion of Illi­nois’ BIPA. The suit is fed­eral because Face­book is based in Cal­i­for­nia and the pro­posed plain­tiff class poten­tially num­bers in the mil­lions. Since then, at least three more fed­eral law­suitswere filed, each mak­ing sim­i­lar claims. The lat­est suit comes from Fred­er­ick William Gullen, an Illi­nois res­i­dent who doesn’t even have a Face­book account, but who insists that Face­book cre­ated a tem­plate of his face when another user uploaded a photo of him.

“Face­book is actively col­lect­ing, stor­ing, and using — with­out pro­vid­ing notice, obtain­ing informed writ­ten con­sent or pub­lish­ing data reten­tion poli­cies — the bio­met­rics of its users and unwit­ting non-users … Specif­i­cally, Face­book has cre­ated, col­lected and stored over a bil­lion ‘face tem­plates’ (or ‘face prints’) — highly detailed geo­met­ric maps of the face — from over a bil­lion indi­vid­u­als, mil­lions of whom reside in the State of Illinois.”

A Face­book spokes­woman said the law­suits are with­out merit and the com­pany will defend itself vig­or­ously against them, but the real­ity is, the cases could play out in a num­ber of ways given that face recog­ni­tion is largely untested legal territory.

Dixon and other legal experts famil­iar with BIPA say Face­book prob­a­bly will argue that because its faceprints are derived from pho­tographs, they are exempt from BIPA’s con­sent require­ments. Shut­ter­fly Inc., another Inter­net com­pany being sued in Illi­nois over facial-recognition tech­nol­ogy, is argu­ing a sim­i­lar stance. Although BIPA clearly con­sid­ers scans of “hand or face geom­e­try” to be bio­met­ric iden­ti­fiers, it also says pho­tographs are not. Bedoya said the word­ing of the law raises a “seem­ing con­tra­dic­tion” that defen­dants fight­ing BIPA law­suits might be able to exploit.

“The law was writ­ten in a way that could have been clearer,” he said.

Face­book points out that users can turn off tag sug­ges­tions, but Dixon said BIPA was writ­ten to ensure that bio­met­ric data col­lec­tion does not take place with­out writ­ten con­sent exe­cuted by the sub­ject of the bio­met­ric iden­ti­fier. The law also makes it ille­gal to sell, lease or oth­er­wise profit from a customer’s bio­met­ric infor­ma­tion, a par­tic­u­lar thorn in the side for com­pa­nies that trade in per­sonal data.

The Face­book and Shut­ter­fly law­suits will be closely watched as pol­i­cy­mak­ers in other states con­sider craft­ing bills gov­ern­ing the use of bio­met­rics. Mean­while, pri­vacy advo­cates say we should all be pay­ing atten­tion. As face-recognition tech­nol­ogy becomes more per­va­sive, it will have increas­ing impli­ca­tions for our lives, both online and off.

“There’s an awful lot at stake here,” Bedoya said. “In the end, do we want to live in a soci­ety where every­one is iden­ti­fied all the time the minute they walk out into pub­lic? I think most peo­ple aren’t ready for that world.”

6. Epitomizing the amoral perspective lurking behind the very successful public relations manifested by Big Tech is their courting of Narendra Modi.

Mr. Modi, the prime minister of India, oversees a nation of 1.25 billion people. Mr. Zuckerberg, the chief executive of Facebook, runs a social network with 1.5 billion active users. Both see themselves as global leaders pushing for broad social change, and both routinely use social media to communicate with their many millions of fans.

On Sunday, the two men engaged in a mutual admiration session at Facebook’s Silicon Valley headquarters, with Mr. Modi fielding preselected questions from a crowd of Facebook employees and guests invited by the Indian Embassy.

Mr. Modi praised social networks like Facebook, Twitter and even China’s Weibo as useful tools for governing and diplomacy. . . .

. . . . Silicon Valley has been eager to assist. . . . .

7. In FTR #795, we detailed the historical evolution of the political ascent of Narendra Modi. His political CV is inextricably linked with the operations, development and history of the RSS, political parent to his BJP Party. The RSS is a Hindu nationalist and fascist party, one of whose alumni assassinated Mahatma Gandhi.

Recent developments have clarified the degree of control and influence that the RSS exerts on Modi. That control is profound and direct.

We also note that Modi’s election was engineered to a considerable extent by Pierre Omidyar, the top dog at EBay. Omidyar also helped bankroll the Maidan coup, that placed the heirs to the OUN/B, Third Reich-allied fascists in power. We should never forget that it is Omidyar who has bankrolled Citizen Greenwald’s journalistic ventures.

Modi says he wants to court Big Tech to raise his country out of poverty. As we noted in FTR #851, he is also trying to do that by relaxing his country’s child labor laws!

India recently wit­nessed a strange spec­ta­cle of Prime Min­is­ter Naren­dra Modi and his cab­i­net col­leagues sub­ject­ing them­selves to an intense scrutiny by the Rashtriya Swayam­se­vak Sangh or RSS, the Hindu nation­al­ist orga­ni­za­tion, regard­ing their ‘per­for­mance’ in office.

Modi him­self used to be an activist of the RSS. But an elab­o­rate cha­rade was kept so far that Modi was in com­mand of the government.

The Indian media has since reported that the RSS even­tu­ally gave ‘thumbs up’ to the gov­ern­ment after Modi and his cab­i­net col­leagues trooped in to meet the RSS bosses and tes­ti­fied at the hear­ing on their ‘schemes and achieve­ments’ in the government.

No Indian gov­ern­ment has ever been made to look so fool­ish and diffident.

Why the RSS decided to sub­ject Modi and his cab­i­net to such a dress­ing down pub­licly is anybody’s guess. Per­haps, it was to project the RSS itself as god almighty in the Modi era. But then, it is an open secret that the Hindu fun­da­men­tal­ist groups are call­ing the shots in the gov­ern­ment, pen­e­trat­ing all walks of national life sys­tem­at­i­cally and impos­ing their agenda.

The upshot of the RSS hear­ing is that Modi has blown his ‘cover’, which helped him so far as prime min­is­ter to cre­ate an impres­sion that he is a human­ist and a devout fol­lower of Bud­dhism who viewed with dis­taste the excesses com­mit­ted by the Hindu zealots on the minor­ity com­mu­ni­ties in India such as the attacks on Chris­t­ian churches.

Under the Modi gov­ern­ment, inci­dents of com­mu­nal ten­sion involv­ing Hin­dus and Mus­lims have sharply increased, accord­ing to offi­cial sta­tis­tics. How­ever, observers have gen­er­ously absolved the prime min­is­ter him­self of any respon­si­bil­ity in this regard, and are will­ing to sus­pend dis­be­lief. The ‘cover’ has now been blown.

The fall­out of this on the India-Pakistan rela­tion­ship can be seri­ous. Obvi­ously, Modi can no longer main­tain with cred­i­bil­ity his stance that he seeks friendly rela­tions between India and Pakistan.

In fact, fol­low­ing the cross-examination of the gov­ern­ment min­is­ters, the RSS spokes­men in their media brief­ings inter alia brought up the explo­sive doc­trine of ‘Akhand Bharat’ as the guid­ing prin­ci­ple for the Modi gov­ern­ment as regards the India-Pakistan relationship.

Broadly, the RSS’s doc­trine is that the great Par­ti­tion of the sub­con­ti­nent in 1947, which led to the cre­ation of Pak­istan, was an aber­ra­tion that can still be got undone if only India worked toward such an objective.

Pak­istan has always had a lurk­ing sus­pi­cion that there is really no day­light pos­si­ble between Modi and the RSS. What used to be a dark sus­pi­cion is now likely to become an arti­cle of faith. Pakistan’s advi­sor to the prime min­is­ter on national secu­rity Sar­taj Aziz (who is the de facto for­eign min­is­ter) has been quoted as say­ing Wednes­day that in Islamabad’s esti­ma­tion, the Modi gov­ern­ment won the 2014 par­lia­men­tary poll on the basis of ‘anti-Pakistan plat­form’ and has been pur­su­ing the same pol­icy from ‘day one’.

Aziz said, “They (Modi gov­ern­ment) want bet­ter ties, but on their own terms”.

To be sure, the mutual rhetoric makes the prospect of a resump­tion of India-Pakistan dia­logue a remote pos­si­bil­ity. And it should be a safe con­clu­sion that the India-Pakistan nor­mal­iza­tion will remain elu­sive as long as the Modi gov­ern­ment remains in power.

Do the RSS big­wigs and their wards in the gov­ern­ment real­ize what colos­sal dam­age they are caus­ing to India’s national inter­ests? The 31 per­cent vote share Modi man­aged to gar­ner in the poll last year to cre­ate India’s first ever RSS-run gov­ern­ment does not give these peo­ple the right to super­im­pose their sec­tar­ian agenda on the entire nation.

India’s national inter­est lies in cre­at­ing a peace­ful exter­nal envi­ron­ment in the imme­di­ate neigh­bor­hood that enables the coun­try to focus on the devel­op­ment chal­lenge through the nar­row cor­ri­dor of time of the next 15–20 years.

Yet, what India is wit­ness­ing is a ratch­et­ing up of ten­sions in the rela­tions with Pak­istan. The past week alone began with India’s army chief Gen­eral Dal­bir Singh shed­ding his fab­u­lous rep­u­ta­tion for being a strong silent sol­dier of dis­cre­tion and reserve – pre­sum­ably, on instruc­tions from the polit­i­cal lead­er­ship – to under­score the readi­ness of the armed forces to wage a ‘swift, short’ war with Pakistan.

It was an incred­i­bly tact­less state­ment to have been made in the present tense cli­mate of bilat­eral ties with Pak­istan. Besides, the bril­liant gen­eral should cer­tainly know that the only way he could ensure that a war with Pak­istan remained ‘swift’ and ‘short’ would be by nuk­ing that coun­try in the dead of the night.

You don’t need a Clause­witz to explain that the ‘kinet­ics’ of war with Pak­istan (nuclear power with big­ger arse­nal than India’s and with second-strike capa­bil­ity) will ulti­mately depend on a vari­ety of fac­tors that are way beyond the con­trol of any­one in New Delhi, civil­ian or military.

Now, it is into this com­bustible mix of rhetoric that the RSS bosses pre­sented their stark reminder to Pak­istan that India has never really rec­on­ciled with the cre­ation of that coun­try in 1947.

…

As for his Indian counterpart’s dire warn­ing, Gen. Sharif was plainly dis­mis­sive: “Armed forces of Pak­istan are fully capa­ble to deal all types of inter­nal and exter­nal threats, may it be con­ven­tional or sub-conventional; whether it is cold start or hot start. We are ready!!”

Are we hear­ing the beat­ing of drum pre­sag­ing the begin­ning of another bloody round of ‘low inten­sity war’ (read vicious cycle of cross-border ter­ror­ism), which cost India heav­ily in human and mate­r­ial trea­sure? Or, could it be that India and Pak­istan are inch­ing toward another full-fledged war? Time only can tell.

Most cer­tainly, peo­ple in respon­si­ble posi­tion should be care­ful about what they say in pub­lic. What Gen. Dal­bir Singh said about ‘short, swift’ war was prob­a­bly fit for a closed-door meet­ing with the Director-General of Mil­i­tary Oper­a­tions at the Army Com­man­ders Con­fer­ence but not as the stuff of grandstanding.

Equally, while the RSS bosses may not be pub­lic offi­cials, they hap­pen to be extra-constitutional author­i­ties wield­ing more power than many erst­while emper­ors in India’s medieval his­tory – and they tend to be taken seri­ously. Sim­ply put, they should know that the notion of ‘Akhand Bharat’ has no place in the 21st cen­tury world order.

India is not pre­sent­ing a con­vinc­ing pic­ture as a respon­si­ble mem­ber of the inter­na­tional com­mu­nity when the so-called movers and shak­ers in the coun­try behave like hol­low men.

The point is, India is keen to secure a seat in the UN Secu­rity Coun­cil as a per­ma­nent mem­ber on the plea that it wants to con­tribute to inter­na­tional secu­rity and world peace and devel­op­ment. Fun­nily, yoga, which Modi has begun prop­a­gat­ing under the UN aus­pices for the good of the soul and body of mankind, is itself all about self-control.

And, yet, in its own region, India chooses to pre­oc­cupy itself with sly thoughts about wag­ing a ‘swift short’ war with its unfriendly neigh­bor and har­bors delu­sion­ary notions of doing away with a sov­er­eign inde­pen­dent nation that came into being 68 years ago.

The Jekyll-and-Hyde split per­son­al­ity does not do good to India’s image. The coun­try would have been far bet­ter off if Modi hadn’t blown his ‘cover’ as a human­ist and a modernizer.

…
India’s national inter­est lies in cre­at­ing a peace­ful exter­nal envi­ron­ment in the imme­di­ate neigh­bor­hood that enables the coun­try to focus on the devel­op­ment chal­lenge through the nar­row cor­ri­dor of time of the next 15–20 years.

Yet, what India is wit­ness­ing is a ratch­et­ing up of ten­sions in the rela­tions with Pak­istan. The past week alone began with India’s army chief Gen­eral Dal­bir Singh shed­ding his fab­u­lous rep­u­ta­tion for being a strong silent sol­dier of dis­cre­tion and reserve – pre­sum­ably, on instruc­tions from the polit­i­cal lead­er­ship – to under­score the readi­ness of the armed forces to wage a ‘swift, short’ war with Pak­istan.

It was an incred­i­bly tact­less state­ment to have been made in the present tense cli­mate of bilat­eral ties with Pak­istan. Besides, the bril­liant gen­eral should cer­tainly know that the only way he could ensure that a war with Pak­istan remained ‘swift’ and ‘short’ would be by nuk­ing that coun­try in the dead of the night.

You don’t need a Clause­witz to explain that the ‘kinet­ics’ of war with Pak­istan (nuclear power with big­ger arse­nal than India’s and with second-strike capa­bil­ity) will ulti­mately depend on a vari­ety of fac­tors that are way beyond the con­trol of any­one in New Delhi, civil­ian or mil­i­tary.
…

Discussion

6 comments for “FTR #866 Because They Can, Part 2: More about Technocratic Fascism”

The New Yorker has a big new profile on Reid Hoffman, one of the original members of the PayPal Mafia and a long-time friend of Peter Thiel going back to their days at Stanford. But Hoffman, it should be noted, is not an uber-Libertarian like Thiel. Quite the opposite it would seem, given his extensive donations to the Democratic party and self-professed general progressive worldview. So there’s at least one non-uber-libertarian throwing around his PayPal Mafia billions, which is nice in some ways, although it makes Hoffman’s quest to turn the future of employment into the unholy love child of LinkedIn and Uber perhaps even more disturbing than it otherwise would have been:

The New YorkerThe Network Man
Reid Hoffman’s big idea.

By Nicholas Lemann

October 12, 2015 Issue

Early on a Monday evening in June, Reid Hoffman, the founder and executive chairman of the business-oriented networking site LinkedIn, met Mark Pincus, the founder and chief executive of the gaming site Zynga, for dinner at a casual restaurant in Portola Valley, California, a wealthy residential town at the western edge of Silicon Valley. Breakfasts and dinners are a big part of Hoffman’s life. He recently published two books on how to be successful in business, and is finishing a third, whose working title is “Blitzscaling.” His business is based on the idea of managing your career through relentless networking, which is something he enjoys.

If someone told you that Hoffman was the equipment manager for a Pearl Jam tour, it wouldn’t seem like a casting error. He is a big, broad-faced man with tousled brown hair, who typically dresses for work in black shorts, a black T-shirt, running shoes, and white socks. He befriended Pincus about twenty years ago, when the two met in the Bay Area to discuss business ideas, and discovered that they both believed that social media would be the next big thing in Silicon Valley. At dinner, Hoffman was wearing two watches, one on each wrist—an Apple Watch and a competing product—so he could see which one he liked better. He bustled in a few minutes late, sat down, and pulled out a small notebook filled with an indecipherable scrawl.

“Joss Whedon,” Hoffman said, referring to the film and television director who specializes in material about vampires and comic-book characters. “Is he somebody you think is cool and fun? No? I’m interviewing him on Wednesday.”

“I have a recruiting dinner,” Pincus said. “Actually a re-recruiting dinner.” He is a forty-nine-year-old triathlete, small and lithe, with a long flop of hair. He was wearing a T-shirt, jeans, and sneakers.

Hoffman shrugged. “Anything top of mind? ’Cause I have a list.” Hoffman tries to begin all meals with a ritual in which both parties write down a list of the topics they want to discuss.

“I made a connection between the things we were talking about with the President and the Summer of Love,” Pincus said.

During President Obama’s reëlection campaign, in 2012, Hoffman and Pincus each gave a million dollars to Priorities USA, the Democratic Super PAC. Since then, they have had the opportunity to spend time with Obama. In a private forty-five-minute meeting in the Oval Office in 2012, Pincus gave the President a PowerPoint presentation on what he calls “the product-management approach to government.” Obama telephones him now and then, sometimes at home, and Pincus and his wife have been Obama’s dinner guests.

In June, Hoffman helped organize the guest list for a dinner party for Obama in San Francisco, and he has had conversations with Obama at several meetings and dinners at the White House. One was for a small group that included Toni Morrison and the actress Eva Longoria, convened to give Obama advice about his post-Presidency. Hoffman and his wife, Michelle Yee, also attended the state dinner in late September for Xi Jinping, the President of China.

LinkedIn has provided the White House with some of the trove of data it has collected about its users’ activities in the job market; the data have been used in the annual Economic Report of the President. Earlier this year, a former LinkedIn executive, DJ Patil, was named to the new position of chief data scientist in the White House. In July, Hoffman organized a meeting for people involved with Obama’s new foundation on how to better harness the power of social networks. His list for dinner with Pincus included the question of what to discuss at that meeting.

The close relationship between Hoffman and the White House isn’t just about his being a major political donor. He and others like him have something more powerful than money to offer: a way for officials to connect with the largest possible audiences. In the nineteenth century, the bosses of political machines served this role; in the twentieth, it was media barons, especially in broadcasting and newspapers; in the twenty-first, it is people who have created vast online social networks.

This year’s Super Bowl attracted the biggest audience in the history of American network television—a hundred and fourteen million people. That represents an annual peak in the life of a declining medium. The three traditional evening broadcast news programs together draw twenty-two million viewers. Every day, a hundred and sixty-four million people in the U.S. and Canada, and up to a billion people worldwide, are active on Facebook.

Obama has said that he wants to encourage civic engagement after he leaves the White House. Silicon Valley can provide powerful tools to accomplish that. The same calculus draws people from Hollywood, such as Joss Whedon, on regular pilgrimages north to meet with Hoffman and others. And it’s why, when the launch of the HealthCare.gov Web site failed spectacularly in the fall of 2013, the White House’s chief technology officer (a friend of Hoffman’s) hired a team of Silicon Valley executives to help fix it.

In politics as in the rest of life, relationships move in two directions. Along with whatever help Obama gets in Silicon Valley, he will absorb some of its view of the world. In that view, humanity is a kind of Prometheus bound by a constricting web of old institutional arrangements that the Internet must clear away. Reid Hoffman and his friends have got very skillful at politics, nationally and globally, and their ideas have a good chance of being implemented.

“Why don’t we start with the Summer of Love?” Hoffman said.

Pincus shook his head. “No, let’s start with your list.”

Hoffman ticked off a few items: An upper-level undergraduate computer-science class he’s teaching at Stanford called “Technology-Enabled Blitzscaling.” Twitch, an online video platform for gamers. His recent meetings with George Osborne, the Chanceller of the Exchequer of the United Kingdom; Ban Ki-moon, the Secretary-General of the United Nations; the Duke of York; and the minister of cabinet affairs of the United Arab Emirates. How Hoffman and Pincus manage their wealth. (Hoffman is worth between three and four billion dollars, which puts him between twentieth and thirtieth place on the list of Silicon Valley’s richest people.)

“Oh, and one more,” he said. “Are you stacking A.I. at all?”

“I got that book ‘Superintelligence,’ ” Pincus said.

“I’ve actually decided it’s worth going deep on,” Hoffman said.

They finished the items on Hoffman’s list. “So let’s go to the President,” Hoffman said. “Start with my view or your view?”

“He’s coming back to his strength, being an orator to the people,” Pincus said. “When I had my one-on-one with him, I said, ‘Where’s Preacher Obama? And Obama the fighter? Scrappy with Congress, in the fray.’ When he’s Preacher Obama, he goes back to that J.F.K. place. My favorite moment was at the end, when he said, ‘Unless we solve governance, you’re not going to have the impact you want to have.’ ”

They talked for a while about ways the political system might be fixed through online activism. Last year, Hoffman contributed a million dollars to Mayday, the crowdfunded Super Pac founded by Lawrence Lessig, the Harvard law professor who is now running for President. Mayday is designed to end all Super PACs, removing big money from politics.

Pincus had one idea he was especially excited about. “In this election, we’d want a million people to raise one billion dollars to run Mike Bloomberg for President,” he said. Pincus and Hoffman know and admire Bloomberg. “Through Kickstarter. Say the minimum is five hundred million. I think he’d be the best. It’d be pretty cool. That would change politics forever.”

He tightened his body into a coil and leaned toward Hoffman. “Why couldn’t that happen? A million people, buying the Presidency. Look at Star Citizen,” he said, referring to an upcoming online multiplayer simulation game about the governance of the United Empire of Earth in the thirtieth century. Through crowdfunding appeals, Star Citizen has brought in some eighty million dollars to finance further game development.

“It’s a game that runs for two years, they have a hundred million users a year, two to three hundred thousand a day. People are passionate about the game, and the guy who does it”—Chris Roberts—“is a star. If you can do that, why can’t people buy the Presidency?” He meant modest voluntary contributors, not big-money donors like Hoffman and him. “A million people give a thousand dollars apiece. I believe there’s a million people who’d like to give a ‘fu ck you’ to both political parties.”

Hoffman often finds himself providing a reality check to his wild-eyed friends. “I think Bloomberg had his people look at it,” he said, meaning that Bloomberg had thought about running and decided not to. But Pincus wasn’t convinced.

“He’s not seventy-per-cent sure he’d win,” Pincus said. “If he thought he’d win, he’d run. If he knew this would work, he’d do it. The media attention would be so massive! I think he’s, like, shy. Maybe a little risk-averse. He’s the opposite of Trump.”

“To some extent, that’s what happened with Obama,” Hoffman said. Thinking about how suddenly the Obama campaign had taken off in 2007 and 2008, he was warming up to the idea.

Hoffman’s dinners gain altitude and velocity as they go on. It’s not about the food and drink. He is on a perpetual diet and seems barely to notice what is put before him. The conversation provides the stimulus: the grander the ideas, the more voluble he becomes.

It was time to get to Pincus’s list. “Summer of Love,” Hoffman said.

“Summer of Love. Should I remind you of the concept? The idea is that, in 2017, it’s the fiftieth anniversary of the original Summer of Love in San Francisco. Can we use that to generate a year-long summer of service?” Pincus explained that a series of rock concerts might be organized, offering tickets competitively through a new app. “Start in San Francisco. It could be gamified civic engagement. It’s a different narrative for tech. It’s not the narrative that’s been written for us. It’s disruption on an establishment level, not a tech level. I spoke to Bono about it, and he went nuts!”

“I’ll give it more thought,” Hoffman said.

“It’d be interesting to see what Obama thinks about it.”

“For sure. We’ll add that to the July meeting.”

Everything about Reid Hoffman—his business, his political activities, his philanthropy, and his social life—is based on a premise about how the economic world will work from now on. In the decades immediately after the Second World War, people thought about the economy in terms of corporations, government agencies, labor unions, and so on; middle-class Americans often aspired to a life spent at a big organization that offered job security, health care, and a pension. Beginning in the mid-nineteen-seventies, this social order fell apart, as economic life became much more uncertain and more favorable to Wall Street than to Main Street. The idea that companies should be run primarily to keep their stock price as high as possible came to the fore, the goal of lifetime employment faded, and bright people who wanted business careers were more attracted to finance than to industry. It was at this time that the growth of middle-class incomes began to slow, and inequality began to increase.

Hoffman is convinced that we can fix the problem through Internet-enabled networks. Work is already becoming more temporary, sporadic, and informal, and this change should be embraced. Many more people will become entrepreneurial, if not entrepreneurs. The keeper of your career will be not your employer but your personal network—so you’d better put a lot of effort into making it as extensive and as vital as possible. A twenty-first-century version of William H. Whyte’s memorably titled 1956 book “The Organization Man” would, by Hoffman’s logic, be called “The Network Man,” and this virtual structure would define the age as fully as the big corporation defined the earlier age.

LinkedIn, which has more than three hundred and eighty million members, is meant to be the enabling device for the emerging era. Although outsiders tend to see the company as an inexhaustible source of nuisance e-mails, its members constantly bulk up their personal networks and post new material to their profiles, to be ready for the next job switch. Still, Silicon Valley is obsessed with “scale,” and LinkedIn is, as yet, insufficiently enormous.

Last year, Jeff Weiner, Hoffman’s successor as C.E.O., announced a plan to have LinkedIn create something he calls “the economic graph,” which would track all employment activity in the world, for the 3.3 billion people who work, with LinkedIn as the platform.

“The vision is to create economic opportunity for everyone on the globe,” Weiner, a small, peppy, bearded man of forty-five, told me when I visited him in his office. “We’ve built the infrastructure. It’s not fantasy.” LinkedIn would be a purveyor of education, in the form of online skill-building courses; Hoffman recently published an essay called “Disrupting the Diploma,” in which he argued that, in the future, people won’t think of higher education only as getting degrees from universities. (In April, LinkedIn acquired Lynda.com, the online education company.)

LinkedIn would also purvey business advice. Three years ago, it assembled a group of eight hundred “influencers”—Hoffman, Bill Gates, Deepak Chopra, Arianna Huffington—who began regularly posting on the LinkedIn site. (Counting the work of less rarefied figures, LinkedIn posts at least five hundred thousand new pieces of writing a month.) It would list every job everywhere and provide a profile for every member of the global workforce, including blue-collar workers. Every time you changed jobs or needed to acquire a new skill, you would use LinkedIn.

The wall of Hoffman’s office, along with photographs of him with Michael Bloomberg, Bill Clinton, and Barack Obama, contains a framed “network graph,” produced by the company’s data-analytics team, showing all the connections he makes to other people through LinkedIn. It’s a diagram of thousands of color-coded lines linking nodes on the network, with Hoffman at the center—by far the most densely connected node.

Hoffman has an uncanny ability to move seamlessly among the worlds of technology, investing, and politics and the worlds of games, science fiction, and comics. “Business is the systematic playing of games,” he says. He seems to conceive of himself as a self-invented superhero: the Ubernode, the world’s most networked person. He isn’t just another conventional networker or another greedy Silicon Valley prick. His project is to build a better world, whose outlines are much clearer to him than to most people.

Although he has become one of the informal rulers of the place he inhabits, the Ubernode is determined to be a kind of reverse exemplar of its culture. He and his wife live in a four-bedroom house in Palo Alto; he doesn’t own a private plane (though he sometimes rents one) or a vast rural estate; and his only obvious luxury, a Tesla, is a recent acquisition. He devotes much of his time to conducting Godfather-like meetings with friends, employees, tech aspirants, visiting dignitaries, and do-gooders who want advice or a favor. At some point, he will gently ask, “How can I be helpful?” All his activities are in the service of the same cause: to make it possible for more people to operate the way he does.

Hoffman likes to ask people, “Who’s in your tribe?” His tribe is entrepreneurs. Nancy Lublin, a “social entrepreneur” in New York (DoSomething.org, Crisis Text Line), says, “Reid introduced me to a different world, where for the first time I felt normal. This thing chose me. This thing chose Reid. I think our religion is entrepreneurship.” Hoffman calls himself “a mystical atheist,” but he says that he is “deeply engaged in religious questions.” The world he has created around himself has elaborate customs and rituals, and it has something to say about every part of life and every major issue. Not long ago, Hoffman worked with a branding company to devise a system of twenty-eight images—they look like the petroglyphs at ancient Native American sites in the West—one for each essential human virtue and one for Hoffman’s initials. Hoffman shares the meaning of the images with members of his tribe.

…

The miseries of Hoffman’s early life ended when he got to Stanford, in 1989. He enrolled in a new major called Symbolic Systems, a combination of philosophy, linguistics, psychology, and computer science. He met Michelle Yee in his freshman year. He also became close to Peter Thiel, the Silicon Valley provocateur who specializes in starting companies and making impolitic public statements. He has come to embody the libertarianism that permeates much of Silicon Valley. They both won seats on Stanford’s student senate, with Hoffman as the left-winger and Thiel as the right-winger.

Hoffman decided to become a philosopher or a public intellectual, a term he likes to use. But after studying for three years at Oxford, on a Marshall scholarship, he decided against an academic career. His professors spent their time thinking about highly specific problems and publishing for an audience of their peers. Hoffman’s ambitions were almost diametrically opposed to that kind of thinking.

In the early nineties, when Hoffman returned from Oxford, he and Thiel spent a weekend at Hoffman’s grandparents’ house, in Mendocino County, talking about what they were going to do with their lives. Thiel told me that Hoffman was entranced by “Snow Crash,” a science-fiction novel by Neal Stephenson, published in 1992, which takes place in a twenty-first-century California where government has collapsed and people create avatars and try to find a new way to live through a technology-based virtual society called the Metaverse.

The term “Internet” was not yet in general circulation, and “social network” was an academic concept that psychologists and sociologists used to derive mathematical formulas that explained people’s patterns of friendships. But Hoffman was playing with a set of ingredients that he had first explored at Stanford, with Thiel and others—fantasy gaming, computer technology, philosophy—and thinking about whether there was a big idea that could enable him to have a major effect on the world, first through a business and then through the creation of an entire social system.

His first job was at a short-lived online service at Apple called eWorld. Then he worked at WorldsAway, a “virtual chat” community, owned by Fujitsu, where users interacted through fictionalized graphic representations of themselves. In 1997, Hoffman started his own company, called SocialNet, which created a way for people to connect with each other for various purposes, mainly dating, using pseudonyms.

SocialNet was soon acquired for a modest sum by a company called Spark Networks, which now owns the religious dating sites JDate and ChristianMingle. Hoffman and his friends had failed to realize that the most successful online networks would get people to use their real names. But in starting online software businesses based on the idea of connecting people, they had arrived at a key perception about the Internet.

Most traditional companies thought of the new medium as a potentially miraculous, and cheap, way to broadcast their products to much larger audiences. People like Hoffman, Pincus, and Thiel saw it as a way to, as Hoffman puts it, “configure the space in which people would interact” on their own: the analogy was more to the telephone than to television or radio. The members of the network would decide what information it carried, and communication would run between members, not from the center to the members. This was the theory; along with it went a super-aggressive mode of business behavior. The robber barons of the late nineteenth century often associated their drive to power with religious piety or with Darwin’s theory of natural selection. The equivalent for Internet entrepreneurs is a rhetoric of fighting established interests on behalf of ordinary people. Pincus coined the phrase “revolution of the ants” to describe what he and his friends believed they were fomenting.

Sarnoff’s law, a twentieth-century broadcasting maxim named after the founder of NBC, holds that the value of a network rises and falls in lockstep with audience size. Silicon Valley’s version is Metcalfe’s law, named after one of the inventors of Ethernet, a pivotal technology for computer-to-computer contact. The law says that the value of a network grows exponentially with the number of its users. (Hoffman prefers the word “superlinear” to indicate that some people in a network are much more connected than others.) His generation’s theory of the Internet means that you can get much bigger, much faster, without creating a conventional product at all.

…

Hoffman spends every Monday at Greylock, the Silicon Valley venture-capital firm, where he is one of a small group of partners. Greylock’s headquarters are on Sand Hill Road, the Via Imperii of technology investing, close to the Stanford campus. LinkedIn, where Hoffman occupies another office for much of the week, has a six-building campus in the industrial flats of Mountain View, a few miles to the east, right next to Google’s.

His two jobs, his relentless round of breakfasts and dinners, his regular forays into the hipper north branch of Silicon Valley in San Francisco, and a great deal of travel put him at the nexus of the technology culture. As he once remarked to a visitor, “More or less, if there’s anything in the Valley I’m going to know about it.” One day when I was at Greylock, Bill Gates dropped by for a few hours to hear about the company’s portfolio. Greylock was an early investor in Facebook, and Mark Zuckerberg now invests part of his fortune with Greylock.

…

The master construct in Hoffman’s world is allocating capital to other entrepreneurs—a category that includes politicians (Senator Cory Booker, of New Jersey, is a favorite), people starting businesses, and founders of nonprofit organizations whom Hoffman considers to be members of his tribe. He told me that in Silicon Valley prestige is not especially important, which means that there is an assumed equivalence between numerically measurable performance and social value.

Technology investing, especially at this moment, represents a highly specialized form of hypercapitalism. In the nineteenth and twentieth centuries, businesses needed investment capital in order to build factories and stores and to acquire equipment and inventory. Only then could they begin to make money. Internet startups don’t require much in the way of physical assets beyond office space, and they can have global reach instantaneously.

It’s theoretically possible to make almost unimaginable amounts of money very quickly, on relatively small investments. Last year, Facebook bought WhatsApp for nineteen billion dollars, when it was less than five years old, with fifty-five employees and minimal revenues. The acquisition brought WhatsApp’s original venture funder a sixty-to-one return on its investment. Greylock was an early investor in Instagram, which sold to Facebook for a billion dollars in 2012, when it had only thirteen employees.

Even in this age of inequality, there’s nothing as unequal as the distribution of success in Silicon Valley. One of Hoffman’s venture-capital friends, Mike Maples, Jr., estimates that of the roughly thirty thousand tech startups a year, only ten will wind up representing ninety-seven per cent of the total value of all of them, and one will represent as much value as all the others combined.

A rigorous study of twenty years’ worth of Silicon Valley startups by two economists—Robert Hall, of Stanford, and Susan Woodward, of Sand Hill Econometrics—found that almost three-quarters of company founders who get venture funding (a category that represents only a small minority of those who try to get venture funding) wind up making nothing. Venture capital is overwhelmingly oriented toward speed, big ideas, and the quest for the obsessive, super-smart, rule-breaking entrepreneur-hero.

There is some aesthetic variation within Silicon Valley—Sand Hill Road offices have hardwood floors and corporate art on the walls, San Francisco offices have exposed-brick walls and open workspaces—but everybody is intense, casual, sleep-deprived, and preoccupied with launches of companies and products. Meetings at Greylock have a suppressed ferocity, as if there were a competition for who among the partners comes across as the most low-key.

…

Because Silicon Valley jobs don’t carry with them twentieth-century expectations about security and benefits, employers compensate people as much as possible with stock, so that they think of themselves as owners rather than employees. It’s assumed that what everybody really wants is to quit and create a startup, and, for those who aren’t in tech, the future as imagined in Silicon Valley may not entail full-time employment at all. Instead, people would assemble their economic lives through elements provided by online marketplace companies from Silicon Valley: a little Uber driving here, a little TaskRabbiting there.

If you grant Hoffman’s premise that the networked economy is the new model, you can view its advent with excitement or with unease. Hoffman likes to cite a statistic from a United Nations paper on sustainable development goals: the global economy will need six hundred million new jobs over the next twenty years, and existing business can provide only ten to twenty million of them. The rest, he claims, will have to come from startups, so societies everywhere will have to reorient themselves significantly in order to make entrepreneurship easier.

That is the object of all Hoffman’s political and philanthropic activity. As he told one visitor, “I’m trying to get politicians to understand that solving this problem is about facilitation of a network, as opposed to”—sarcastically—“the New Deal.” He has a soaring optimism in the power of his model to make life better for everybody, and believes that the pre-Internet arrangements can’t do that. He told me that he has concluded over the past year that the American political parties are too entrenched to solve the country’s problems, so he’s unlikely, in this election cycle, to be making another big contribution to Priorities USA, the Democratic Super PAC he supported in 2012. (Thus far, among the Presidential candidates, he has had private meetings with Hillary Clinton and Jeb Bush, but has not made up his mind whom to support for President.) What he’s trying to achieve, he says, is “massive, outsize, discontinuous impact.”

Not everyone in Silicon Valley is as sanguine about the technology-enabled economic revolution. There is an ongoing conversation about the uncertain economic future for middle-class and working-class Americans who don’t have technology skills. Joe Kraus, an old friend of Hoffman’s who works for Google’s venture-capital division, told me, “My instinct is that creating the valley elsewhere hasn’t been successful. It would be presumptuous to say, ‘Of course it will work elsewhere.’ I just don’t know.”

John Lilly, one of Hoffman’s partners at Greylock, was openly pessimistic: “I’m more lefty than your typical Silicon Valley guy. I believe actions have consequences, and shit like that. Clearly, wealth is becoming more concentrated, and the network takes a larger and larger share.” He suspects that the twentieth century was an anomaly. “There was no middle class, then there was a middle class, now we’re back where we started—it’s hollowed out. I don’t see where the middle class is going to come from. You’ll start seeing more conversation about a guaranteed income. Right now, there’s an absolute belief that markets can solve everything—software can.”

Even Mike Maples, who describes himself as someone who believes in “free people and the free market,” told me that when he went to Dallas to talk to Glenn Beck, the conservative talk-show host, he was surprised to find that Beck was concerned about how his audience would be affected by the economic future that Maples was describing. “He said, ‘What do you say to a guy like me? How do you answer the argument that there are forty million people in red states who are going to get displaced?’ ”

Hoffman’s new world of online platforms, marketplaces, and networks produces companies that emerge from the brutal competition among startups as big top-down organizations with quasi-monopoly status: Amazon in retailing, Facebook in social networking, Google in search, LinkedIn in business networking. Once network effects really kick in, they create a powerful barrier to entry for potential rivals: the more effort you’ve put into your identity on Facebook or LinkedIn or YouTube, the more difficult it becomes for you to switch to a competitor. One of Peter Thiel’s favorite bad-boy notions is that competition is “antipodal to capitalism”: once a company becomes successful, it should try to establish a monopoly position, so that it can charge the kind of prices and make the kind of profits that are available only to companies without meaningful competitors.

Perhaps one class of people will live inside big companies, and a larger class will be part of a looser networked community. The more sincerely you believe that a better world is emerging from this process—a world of rapid improvement in the lives of billions of people—the more wholeheartedly you can work to hasten its advent. It’s hard to imagine that there could be a truer believer than Reid Hoffman.

…

It was the end of a long day of meetings at LinkedIn—philanthropy, product reviews, a visitor from Hollywood—but Hoffman had lit on a scalable topic. His arms rose above his head, as if pulled by invisible wires. “Is what we can create an ethical system, or a system that doesn’t contravene humans? There will be some people who think whatever’s right is to let the next step in evolution play out. That’s a scary thought.”

“There’s a nonzero chance that A.I. will be smarter than humans,” Manyika said.

“Isn’t that one hundred per cent? Isn’t it just a time coefficient? If we survive at all. Nobody knowledgeable thinks it’s zero. Everyone knows it’s ten to a hundred years.”

“There are people looking at this,” Manyika said. He and Hoffman were hoping that this was the kind of issue that might engage Pope Francis.

It was time for the next item on Manyika’s list: “Jobs. Middle class.” Manyika was one of a roster of people, including five Nobel Prize-winning economists, who, in June, had signed a statement called “Open Letter on the Digital Economy,” which called attention to the problem of dramatic technological advances and stagnant growth in income or wages for most Americans. The letter called for an ambitious program of new research and changes in the policies of government and business.

Although Hoffman usually likes being associated with big liberal-minded reformist efforts, he had not signed the letter. “My LinkedIn team was hesitant,” he said, a little apologetically.

“Eric didn’t sign, either,” Manyika said.

“I agree with the thrust of it. We should do something.”

Manyika understood that not every chief executive in Silicon Valley could sign the statement, but he was gently trying to pull Hoffman to the left, and he knew how to frame the argument so that it would appeal to him. He went on, “We cannot ignore this problem. Right now, everybody’s punting. We know the share of income that goes to wages is a declining portion, compared with capital expenditures. What does that mean for jobs? Entrepreneurship is part of the answer. Mass-scale entrepreneurship. Before you even get to A.I.”

“You have to be able to let people adapt,” Hoffman said. “You have to have cheap resources to put across the whole system. How do you get inclusion within the tech ecosystem?”

“Very few of the programs have scale,” Manyika said.

“You have to scale to infinite,” Hoffman said. ?

Ok, that’s a lot to unpack, but based on the following, it sounds like Reid Hoffman wants to turn LinkedIn into a giant global jobs-posting board that we’ll all use to find work as we move out of the era of the “The Organization Man” and into the age of “The Network Man” where everyone becomes an entrepreneur in the business of selling their services in an Uber-like piecemeal manner. And Uber-izing the economy should somehow address the issues that have emerged in the mid-seventies as economic life become much more uncertain for the middle-class and for more favorable to wealthy interests. And LinkedIn is creating an “economic graph” with the goal of creating “opportunity for everyone on the globe” via selling their services via LinkedIn’s networking services:

…Everything about Reid Hoffman—his business, his political activities, his philanthropy, and his social life—is based on a premise about how the economic world will work from now on. In the decades immediately after the Second World War, people thought about the economy in terms of corporations, government agencies, labor unions, and so on; middle-class Americans often aspired to a life spent at a big organization that offered job security, health care, and a pension. Beginning in the mid-nineteen-seventies, this social order fell apart, as economic life became much more uncertain and more favorable to Wall Street than to Main Street. The idea that companies should be run primarily to keep their stock price as high as possible came to the fore, the goal of lifetime employment faded, and bright people who wanted business careers were more attracted to finance than to industry. It was at this time that the growth of middle-class incomes began to slow, and inequality began to increase.

Hoffman is convinced that we can fix the problem through Internet-enabled networks. Work is already becoming more temporary, sporadic, and informal, and this change should be embraced. Many more people will become entrepreneurial, if not entrepreneurs. The keeper of your career will be not your employer but your personal network—so you’d better put a lot of effort into making it as extensive and as vital as possible. A twenty-first-century version of William H. Whyte’s memorably titled 1956 book “The Organization Man” would, by Hoffman’s logic, be called “The Network Man,” and this virtual structure would define the age as fully as the big corporation defined the earlier age.

LinkedIn, which has more than three hundred and eighty million members, is meant to be the enabling device for the emerging era. Although outsiders tend to see the company as an inexhaustible source of nuisance e-mails, its members constantly bulk up their personal networks and post new material to their profiles, to be ready for the next job switch. Still, Silicon Valley is obsessed with “scale,” and LinkedIn is, as yet, insufficiently enormous.

Last year, Jeff Weiner, Hoffman’s successor as C.E.O., announced a plan to have LinkedIn create something he calls “the economic graph,” which would track all employment activity in the world, for the 3.3 billion people who work, with LinkedIn as the platform.

“The vision is to create economic opportunity for everyone on the globe,” Weiner, a small, peppy, bearded man of forty-five, told me when I visited him in his office. “We’ve built the infrastructure. It’s not fantasy.” LinkedIn would be a purveyor of education, in the form of online skill-building courses; Hoffman recently published an essay called “Disrupting the Diploma,” in which he argued that, in the future, people won’t think of higher education only as getting degrees from universities. (In April, LinkedIn acquired Lynda.com, the online education company.)

LinkedIn would also purvey business advice. Three years ago, it assembled a group of eight hundred “influencers”—Hoffman, Bill Gates, Deepak Chopra, Arianna Huffington—who began regularly posting on the LinkedIn site. (Counting the work of less rarefied figures, LinkedIn posts at least five hundred thousand new pieces of writing a month.) It would list every job everywhere and provide a profile for every member of the global workforce, including blue-collar workers. Every time you changed jobs or needed to acquire a new skill, you would use LinkedIn.

…

“Hoffman is convinced that we can fix the problem through Internet-enabled networks. Work is already becoming more temporary, sporadic, and informal, and this change should be embraced. Many more people will become entrepreneurial, if not entrepreneurs. The keeper of your career will be not your employer but your personal network—so you’d better put a lot of effort into making it as extensive and as vital as possible. A twenty-first-century version of William H. Whyte’s memorably titled 1956 book “The Organization Man” would, by Hoffman’s logic, be called “The Network Man,” and this virtual structure would define the age as fully as the big corporation defined the earlier age.”

And in order to achieve this utopian future, Hoffman warns that it’s going to require “trying to get politicians to understand that solving this problem is about facilitation of a network, as opposed to”—sarcastically—“the New Deal.”:

…
Because Silicon Valley jobs don’t carry with them twentieth-century expectations about security and benefits, employers compensate people as much as possible with stock, so that they think of themselves as owners rather than employees. It’s assumed that what everybody really wants is to quit and create a startup, and, for those who aren’t in tech, the future as imagined in Silicon Valley may not entail full-time employment at all. Instead, people would assemble their economic lives through elements provided by online marketplace companies from Silicon Valley: a little Uber driving here, a little TaskRabbiting there.

If you grant Hoffman’s premise that the networked economy is the new model, you can view its advent with excitement or with unease. Hoffman likes to cite a statistic from a United Nations paper on sustainable development goals: the global economy will need six hundred million new jobs over the next twenty years, and existing business can provide only ten to twenty million of them. The rest, he claims, will have to come from startups, so societies everywhere will have to reorient themselves significantly in order to make entrepreneurship easier.

That is the object of all Hoffman’s political and philanthropic activity. As he told one visitor, “I’m trying to get politicians to understand that solving this problem is about facilitation of a network, as opposed to”—sarcastically—“the New Deal.” He has a soaring optimism in the power of his model to make life better for everybody, and believes that the pre-Internet arrangements can’t do that. He told me that he has concluded over the past year that the American political parties are too entrenched to solve the country’s problems, so he’s unlikely, in this election cycle, to be making another big contribution to Priorities USA, the Democratic Super PAC he supported in 2012. (Thus far, among the Presidential candidates, he has had private meetings with Hillary Clinton and Jeb Bush, but has not made up his mind whom to support for President.) What he’s trying to achieve, he says, is “massive, outsize, discontinuous impact.”
…

So Hoffman’s solution to a crisis in contemporary capitalism and increasing systemic inequality and unemployment is to turn everyone into a contractor and just let the power of networking work its magic. Magic that will be absolutely vital since “the global economy will need six hundred million new jobs over the next twenty years, and existing business can provide only ten to twenty million of them. The rest, he claims, will have to come from startups, so societies everywhere will have to reorient themselves significantly in order to make entrepreneurship easier.”

One contention of the Republican party is that Democrats don’t understand business and are bad for business.

GOP front-runner Mitt Romney has basically built his entire campaign on the theory that he knows how to run an economy and the Democrats don’t.

Given this, why does one of the most successful business-regions of America overwhelmingly vote Democratic?

And if Democratic “big-government” and “high taxes” choke off innovation, investment, and incentives, why have so many companies located in high-tax, highly regulated California done so extraordinarily well?

We put these questions to Reid Hoffman, who is one of the most successful entrepreneurs and investors in the country. A partner at Silicon Valley venture capital firm Greylock, Reid has invested in Facebook, Zynga, and many other companies. He is also the co-founder of one of last year’s standout IPOs: LinkedIn.

In Reid Hoffman’s opinion, Silicon Valley’s success comes despite California’s regulatory environment and “big government,” not because of it. Silicon Valley, Hoffman says, is powered by its amazing ecosystem of investors, engineers, and entrepreneurs, along with more than a half-century of start-up culture. And the Valley’s overwhelming support of Democrats, Hoffman suggests, is due as much to the Democrats’ social views as their economic views.

But Silicon Valley is a big fan of the Democrats’ efforts to help start-ups, Hoffman says.

And Hoffman ridicules the Republican argument that increased taxes would make him and other investors and entrepreneurs work less hard.

So there we go: Hoffman supports the Democrats despite the party’s support for thinks like regulations or “big government” and more due to social issues. And he scoffs at the notion that the ultra rich wouldn’t work as hard with higher taxes. So, in that respect, he really is kind of sort of more liberal than, say, Peter Thiel: Hoffman appears to still be a hyper-capitalist technocrat that can’t envision a future that doesn’t involve some sort of hellish global rat race where everyone is as insecure as their social network allows, but at least he seems to have socially liberal view on non-economic matters. Sort he’s sort of a Libertarian-oligarch-lite: his visions for the future is probably going to be a stressed out techno-hellscape that almost no one enjoys, but he could be worse!

Google Inc. plans to invest in a new round of funding for Symphony Communication Services LLC that values the Wall Street-backed messaging company at about $650 million, people familiar with the matter said.

Google’s support adds a technology-industry stalwart to the list of banks and investment firms—such as Goldman Sachs Group Inc., Morgan Stanley and BlackRock Inc. —that have backed Symphony and its fledgling communications software. Symphony’s latest funding round is expected to close this week, the people said.

Symphony was created as an alternative to Bloomberg LP’s terminals, which have long been a hallmark of trading floors but are viewed as a major cost center for financial firms.

The agency said at the time that the agreement with Goldman, Deutsche Bank AG , Credit Suisse Group AG and Bank of New York Mellon Corp. was “to help ensure the banks’ responsible use” of Symphony. The deal requires the platform to keep copies of all electronic communications sent to or from the four banks through Symphony for seven years.

An initial 14 firms invested $66 million in Symphony, which bought Palo Alto, Calif.-based startup Perzo Inc. last year. Goldman led the consortium and contributed its in-house messaging system.

…

While it’s possible that Google simply wants in on a growing market for financial industry super-encrypted communication platforms, keep in mind the Symphony’s tune might resonate with a number of other industries that would also like a super-encrypted communication and collaboration platform and expanding into other sectors was always part of the plan:

ymphony, a company backed by some of the world’s elite financial institutions, was created last Fall with a mission to transform the way Wall Street shares and collaborates around content — and it has set its sights set on some of the world’s most established content and communications tools.

Last fall, these companies contributed $66M to finance Symphony, and using that money, purchased Perzo, a company that was building a secure communications platform. After the purchase, they named Perzo founder David Gurle as Symphony CEO.

Gurle, whose background comes right out of business software central casting with stints at Microsoft Lync, Skype and Thomson Reuters, would seem uniquely qualified to build such a product. Symphony’s backers have been using a variety of secure communications applications and content tools, but that fragmentation was becoming a huge problem.

They were looking to consolidate on a single, secure platform, and they created Symphony to replace many of the established players — whether that’s Microsoft Lync or AOL (TechCrunch’s parent company) or Yahoo! instant messaging in communications or Thomson Reuters and Bloomberg in financial content. The goal from the start has been to become the de facto tool for communicating, collaborating and sharing content in a financial services setting.

“Those companies that invested in Symphony realize they can’t live in a fragmented way forever. It’s not good for business,” Gurle explained. “They put their money in to make the business successful and to make Symphony successful. You don’t see this align very often,” he said.

…

Can They Pull It Off?

R Ray Wang, principal at Constellation Research describes Gurle as a visionary and believes that Symphony is creating an entirely new category of software.

“By targeting the financial services industries first, they show to every other industry from governments to retail that here’s a way to bring these systems of engagement to create digital disruption in the market,” Wang told TechCrunch.

“When the original design point is about security and compliance to some of the strictest standards set by governments on financial services, that’s no comparison to companies adding security on as an after fact,” Wang said.

He added that the core product Perzo was built for massive sharing of massive amounts of information at financial-services security scale. He believes Symphony has the potential to create private collaboration networks and eventually perhaps even public ones.

As for that content component, Wang says that could be the toughest part to pull off. “The goal is to be able to burst content with heavy context. They have the technology, but I’m not sure if they have the context yet. That takes time,” he said.

Looking Ahead

While today the product focuses primarily on the needs of financial services, Gurle says over time, the content can adapt to the many different content-centric industries such as life sciences, medicine, shipping, manufacturing, accounting, legal and energy.

For now, Gurle wants to get the financial services piece right, then he sees going after adjacent markets like legal and accounting. After that, perhaps they can begin to go after other industries, but the roadmap is in place now.

The plan is eventually to create an open source ecosystem around Symphony, but Gurle says how that will work and which components will go into open source is still very much being debated internally.

The product has been in Alpha since January with the 15 funders and a thousand daily active users, preselected from public alphas applicants. It plans to go into a wider Beta release with 10,000 users in April and to become generally available by the end of June or early July. By that point, the company will have a better sense of which pieces they will put into open source and which they will control. It could potentially operate like Pivotal, which open sourced pieces of its Big Data Suite last week, while holding other parts back for the commercial version, but how it will work with Symphony is still being decided.

…

“While today the product focuses primarily on the needs of financial services, Gurle says over time, the content can adapt to the many different content-centric industries such as life sciences, medicine, shipping, manufacturing, accounting, legal and energy.”
Symphony for everyone! And should Symphony expand to other industries, it’s certainly possible that large players will also be forced to keep copies of their encryption keys with a 3rd party in a similar compromise to what was reached with four of the large Symphony clients/investors to allow for regulatory oversight. But, of course, that compromise deal doesn’t actually apply to any other Symphony clients. Just those four large Symphony users that also happen to be investors. And given the highly regulated nature of financial industry communications compare to many other industries, it doesn’t seem very likely that other industries would be subject to even that “compromise” for greater oversight.

So who knows, we could be seeing super-encrypted “collaboration” messaging systems pop up in all sorts of industries, compliments of Goldman Sachs and now Google. Just imagine how many industries might be interested in this kind of tool. For instance, there’s lots of collaboration involved with auto manufacturing. Could auto manufacturers do what they need to get done in terms of communicating with their various parts suppliers, etc, using Symphony? If so, there’s probably a company Wolfsburg that wishes it had been using Symphony for the last decade or so:

Reuters

VW Scandal: German Prosecutors Raid Company Facilities for Evidence

Oct 8 2015, 9:28 am ET

BERLIN — German prosecutors raided Volkswagen’s headquarters and other offices on Thursday as part of their investigation into the carmaker’s rigging of diesel emissions tests.

Prosecutors in Braunschweig, near the company’s headquarters in Wolfsburg, said the aim of the searches was to “secure documents and data storage devices” that could identify those involved in the alleged manipulation and explain how it was carried out.

Volkswagen said it was supporting the investigation and had handed over a “comprehensive” range of documents.

Almost three weeks after it confessed publicly to rigging U.S. emissions tests, Europe’s largest carmaker is under huge pressure to identify those responsible, fix affected vehicles and clarify exactly how and where the cheating happened.

…

In a statement on Thursday, Volkswagen said it was still investigating whether or to what extent the software interfered illegally with vehicles.

“Prosecutors in Braunschweig, near the company’s headquarters in Wolfsburg, said the aim of the searches was to “secure documents and data storage devices” that could identify those involved in the alleged manipulation and explain how it was carried out.”There’s an app for that.

Pando DailyWith “Convoy,” tech billionaires build another castle at another narrow in the stream

By Mark Ames
written on November 4, 2015

America’s trucking industry is a $749 billion sector in need of disruption.

And last week, A-list Big Tech billionaire investors—led by (in order of billions) Jeff Bezos, Uber co-founder Garrett Camp, and The Intercept publisher Pierre Omidyar—rolled out their latest startup, Convoy, with the goal of doing to the trucking industry what Uber has done for taxis.

The initial investment is small — a total of $2.5 million — but the stakes are potentially huge, as are the net worths of the other investors in Convoy: billionaires Marc Benioff, Drew Houston, Henry Kravis; former Starbucks CEO Howard Behar; angel investors Ali and Hadi Partovi; Expedia CEO Dara Khosrowshahi; and the secretive investment bank Allen & Co, which hosts the annual Sun Valley billionaires’ retreat, and which features ex-CIA chief George Tenet as managing director.

What’s significant is not the pocket change each Big Tech/Big Finance billionaire dropped into the Convoy kitty, but their caliber — and their expectation of being able to reconfigure the flow of all those inefficient trucking industry billions spilling around the old economy. As Hadi Partovi told Bloomberg last week,

As an angel investor, it’s the largest market opportunity I’ve ever seen, at least since looking at Facebook in 2005.

Whether or not Convoy turns out to be the Uber of short-to-medium-haul business-to-business trucking, it’s safe to assume that sometime soon, tech will transform and restructure the $749 billion trucking sector in a similar way. And usually this means smashing the old structures, connecting users more seamlessly — and centralization on a scale never before thought possible.

For all of the Internet’s initial promise (and cant) of smashing traditional hierarchies and creating horizontal structures that democratize power and politics, the reality is that the Internet economy has centralized power and wealth and the political economy on a scale not really seen since the railroads destroyed the old economy and quickly created hugely centralized new industries, which centralized into trusts — and created a class of oligarchs with outsized wealth and power that no democracy could survive.

Uber is one of the clearest examples of how this works: Hundreds of small local taxi monopolies around the country and the world are smashed, a huge new pool of unused labor and assets are brought into the taxi market, benefiting the taxi consumer (usually) — but more importantly, centralizing all the revenues dislodged from the hundreds of disrupted local taxi monopolies around the world, to be distributed among a tiny group of already-wealthy guys who own shares in the centralized taxi mega-monopoly.

The same was true with Convoy investor Jeff Bezos’ Amazon.com — which destroyed most of the small- and medium-sized bookstore industry, and has been laying waste to the publishing industry as well, by centralizing the consumer-to-business all under one monopoly roof. Today, Jeff Bezos is the third richest American worth $53.2 billion (if you subscribe to the fiction that David Koch actually is worth the 50/50 split that his meaner brother Charles allows him—in reality, the Koch brothers’ combined $105 billion net worth is all Charles’, but he wisely wants to avoid the negative attention that 12-figure wealth brings).

Likewise, Omidyar’s eBay rolled up and centralized much of the classifieds business that used to be widely distributed in small and large newspapers across the country, centralizing America’s and parts of the globe’s classifieds and small business advertising business into one mega-classifieds, making billionaires out of him, Meg Whitman and Jeff Skoll while padding the pockets of his venture capital investors. Or in plain English—centralizing the business, the power and the wealth of that sector in the hands of a tiny few. Which gave Omidyar the power to roll up the biggest online payments business, PayPal, into his vertical structure — and with his money, he almost managed to roll up eBay’s only domestic rival, Craigslist.

That centralized wealth and political power leads to some strange spectacles, which we the peons can only watch in awe and horror, like mortals before the Olympian gods (only our gods like to imagine themselves as Second Life virtual heroes riding Segways) — the weird billionaire rivalry between online shopping billionaires Bezos and Omidyar, which a decade or so ago had pegged Omidyar as the winner for not warehousing any merchandise, but which then turned in Bezos’ favor; in which Bezos bought the Washington Post before Omidyar could make up his mind, so Omidyar pumped the same amount into a fledging new media startup, while both Bezos and Omidyar split the biggest treasure trove of leaked NSA secrets in history…

That’s the part we see, and we chatter about. But there’s a grubbier side to the fast, disintermediated, techie-clean online shopping world that’s made consumerism so convenient— and that’s the $749 billion trucking industry, a labor-intensive, old economy, pollution-spewing industry that serves as the vast grubby substructure to the ecommerce platform superstructure.

The trucking industry today is in many ways quite different from the taxi industry that Uber co-founder Garret Camp faced. Trucking was the first major industry that deregulation was tested out on in the 1970s — first under President Ford, and then in earnest under Jimmy Carter. Ford started the process of trucking deregulation in 1975-6, taking the advice of the chairman of his Council of Economic Advisors: Alan Greenspan.

Ford was a true believer in free-market ideology, although he hadn’t ditched anti-monopoly politics the way Reagan would. The trucking industry was largely subjected to New Deal era regulations, overseen by the Interstate Commerce Commission (ICC) since 1935. Different types of licenses, weight hauls and types of cargo were all regulated by the ICC in order to prevent the sort of disastrous over-competition that fed the Great Depression and its chronic deflation and production declines. But the problem in the 1970s was high inflation and low growth, and it was thought that deregulation would lower prices for consumers and spur growth in the trucking industry.

As Ford said at the time,

Few sectors of the American economy were more stifled by government regulation than the transportation industry, and I thought deregulation was urgently required.

One of Ford’s biggest allies in the Senate—at least in deregulating the airline industry—was Senator Ted Kennedy; and to help him push through airline deregulation, Kennedy brought a Harvard professor to Washington named Stephen Breyer. (FedEx became the biggest beneficiary of deregulating the air cargo industry, and later FedEx become a trucking industry leader too—and its business is increasingly tied directly into the ecommerce structure.)

The underlying neoliberal idea driving Kennedy and a lot of other “New Democrats” in the 70s was decentralization and anti-monopoly— in which the federal government was the bad centralizing monopoly power stifling competition. The problem of course would come when, freed from regulation and then antitrust oversight, many of these industries would become privately centralized far worse and far more coercively than when they were regulated under the ICC.

…

Deregulating trucking meant freeing up truckers to become independent small businessmen; but they quickly started losing control over their fates as they relied on the consolidated big freight businesses like FedEx and UPS to negotiate rate pay with the thousands of small trucking brokers and firms that they used. The big freight companies, like their New Economy counterparts, want “independent contractors” rather than full-time employees who cost a lot more and who are covered better by federal and local labor regulations.

Last year, the Washington Post’s Lydia DePillis did a series of great and at times wrenching articles on the harsh, declining lives of port truckers, just as the Teamsters were trying to organize them into unions. (Before deregulation, the Teamsters had a lock on much of the regulated trucking workforce, but that lock—sullied by mob ties—got broken up by deregulation.)

In her article, “Trucking Used to be a Ticket to the Middle Class, Now It’s Just a Low-Paid Job” DePillis writes,

Since Congress deregulated the industry in the 1980s — when a unionized truck driver made today’s equivalent of $44.83 an hour — about two-thirds of the nation’s 75,000-odd port truck drivers have become independent operators. And now, “independence” has become shorthand for earning less: Owner-operators make an average of $28,000 a year. That’s $7,000 less than employee drivers, who are paid by the hour and typically receive more comprehensive benefits.

In other words: The industry workforce and assets have already been Uber-ized, only without the tech platform and tech billionaire political power to restructure and re-centralize all those revenues. Independent contractors mean cheaper labor costs and no legacy costs; it also means shifting the costs of capital investments (trucks, gasoline, insurance, maintenance) onto the “independent contractor” just as Uber has done. And that has resulted in a lot of unreported misery and pain for the tens of thousands of truckers whose work services the ecommerce platforms that made billionaire/media titans of Bezos and Omidyar.

…

In Fortune magazine’s description of Convoy, if you sift through all the cant about inefficiencies, what you really get is a blueprint for massively centralizing a highly decentralized industry:

Local freight shipping is an extremely fragmented market, with lots of small proprietors. Washington state alone has more than 24,000 such companies, Dan Lewis, founder and chief executive of Convoy, told Fortune.

Right now the process of finding a carrier to handle a given load typically involves a round-robin of calls between the customer, a broker, and the carriers. The broker acts as a go-between to find an open carrier, work out price, and book the business. “It’s a very manual and phone-taggy process,” Lewis said.

For their trouble, the brokers charge anywhere from 20% to 45% of the job’s worth, Lewis said.

Convoy’s aim is to automate that process, putting the customer together with the carrier using a back-end system running on Amazon Web Services and an Android app on the front end. A version that uses Apple’s iOS mobile software is coming soon.

Indeed.

The question of who benefits from this “efficiency” and what it means can be quantified. When the revenues are concentrated through an app or two, and distributed to a small handful of incredibly wealthy investors, there you have the real architecture of this New Economy trucking industry.

Or another way of looking at how Internet companies like Uber, Amazon, eBay and, if it all goes well, Convoy operate — the metaphor of “the narrows” in the stream, as described by JA Hobson a century ago:

Each kind of commodity, as it passes through the many processes from the earth to the consumer, may be looked upon as a stream whose channel is broader at some points and narrow at others. Different streams of commodities narrow at different places. Some are narrowest and in fewest hands at the transport stage, others in one of the processes of manufacture, others in the hands of export merchants. . . .

In the case of Internet Economy, the “narrows” are the app or the platform which control the stream; now replace “German barons” with “Bezos” or “Omidyar”:

Just as a number of German barons planted their castles along the banks of the Rhine, in order to tax the commerce between East and West which was obliged to make use of this highway, so it is with these economic ‘narrows.’ Wherever they are found, monopolies plant themselves in the shape of ‘rings,’ ‘corners,’ ‘pools,’ ‘syndicates,’ or trusts.’

With Convoy, another castle is being built at another narrow in the stream.

“The question of who benefits from this “efficiency” and what it means can be quantified. When the revenues are concentrated through an app or two, and distributed to a small handful of incredibly wealthy investors, there you have the real architecture of this New Economy trucking industry.”Yep, the New Economy trucking industry probably going to be pretty “efficient”. At least in terms of cost of labor efficiency. How those “efficiencies” get divided between the new tech trucking barons with their “narrow stream” oligopolies and the end consumers of shipped products will be something to watch.

The recent student protests at the University of Missouri just took an unfortunate turn following a series of violent threats against the campus’s black students issued via Yik Yak, an anonymous app decided to let users says whatever about whatever, but totally anonymously. Fortunately, the threatening Yik Yak user has been arrested. Unfortunately, as the below points out, this is far from the first time Yik Yak has been used in this manner, and there’s no indication that’s going to change any time soon:

The Washington PostWhat is Yik Yak, the app that fielded racist threats at University of Missouri?

By Caitlin Dewey
November 11 at 10:51 AM

On Tuesday evening, students at the embattled University of Missouri noticed several disturbing messages on the anonymous messaging app Yik Yak.

“Some of you are alright. Don’t go to campus tomorrow,” said the second, echoing a warning posted to 4chan the day before the Umpqua Community College shooting last month.

University of Missouri police have said they apprehended the person suspected of posting both threats and have reassured students that there’s no cause for further concern. (The school in Columbia, Mo., is operating normally, and classes have not been canceled.) Even if the threats were empty, however, they’re sure to inflame concerns over the ever-controversial Yik Yak, which only three weeks ago was panned by a coalition of 70 women’s and civil rights groups as a font of discrimination, harassment and abuse.

Yik Yak is essentially a public, anonymous, location-based message board: After downloading the app, you can post anything you want to nearby readers — who can then comment, up-vote or down-vote your “yak,” also anonymously.

…

What is Yik Yak?

Yik Yak is an anonymous, location-based bulletin board that — per the analytics firm App Annie — has ranked among the top 30 social media apps in the United States almost constantly since 2014. The company has raised more than $73 million in funding, most of it from Silicon Valley powerhouse Sequia Capital. It’s valued at between $200 million and $300 million.

While the app is popular among college students, it’s gotten lackluster reviews elsewhere. Common Sense Media, the children’s advocacy group, gives it a a one star rating out of five — apparently because a zero-star option is not available. “Yik Yak’s just yucky,” the organization wrote. “It’s a gossipy, lewd, crass online environment in which anything goes.”

Has Yik Yak had problems with threats or harassment in the past?

It has! So many problems, in fact, that on Oct. 21, a coalition of civil rights groups descended on Washington, D.C., to urge the Department of Education to issue guidelines against it. (The DoE has said it “looks forward to responding,” though it hasn’t yet.) At this rate, the app is fielding a new high-profile incident roughly every two weeks. A sampling:

The list goes on, needless to say, but these are some of the events to make the news. Victims allege that a range of cyberbullying and malicious gossip goes down outside the spotlight, too.

Has Yik Yak done anything about it?

Well, yes — but not as much as critics would hope. When the app launched in 2013, it was available to college and high school students. Yik Yak has since marked the app 17+ in the Apple and Google Play stores, a feature that allows parents to block younger kids from downloading it. They also partnered with a company called Maponics to draw “geofences” around elementary, middle and high schools, effectively making the app unavailable within a given distance from that location.

Since early 2015, Yik Yak has also displayed a warning when users attempt to post phone numbers or messages with certain keywords, such as “bomb”: “Pump the breaks,” it reads, in part, “this yak may contain threatening language.”

Still, many people have argued this isn’t enough and that Yik Yak needs to do more to protect users from abuse. While the app warns users not to “bully” other users or to “post other people’s phone numbers, street addresses … or other personally identifiable information,” the abuse filter does not screen for full names or addresses, which makes it a convenient tool for doxing. Yik Yak also provides a way for users to “flag” abusive yaks, but the company is far from transparent about how long it takes moderators to get to flagged messages.

In late 2014, an 18-year-old woman started a Change.org petition urging Yik Yak’s founders to shutter their app, writing that she was brutally cyberbullied after attempting to kill herself. The petition earned more than 80,000 signatures, and the woman met with founders in January 2015. In late October, however, she posted an angry update: “They assured me that various new policies would go into effect that would protect kids from bullying and harassment on Yik Yak,” she wrote. “Nearly a year later, those promises have not held up.”

Can universities do anything about the app?

There’s very little that universities can do. At least a dozen have symbolically “banned” the app, or blocked access to it on their Wi-fi networks. That’s controversial, though, and pretty pointless: Students can still access the site via their phone’s data service.

At least one school — the tiny College of Idaho, in Caldwell, Idaho — asked Yik Yak to place a geofence around campus, the same method they use to block the app at high schools. Yik Yak declined.

“At this rate, the app is fielding a new high-profile incident roughly every two weeks.”
If, as the saying goes, there is indeed no such thing as bad advertising, Yik Yak’s propensity to generate high-profile incidents every couple of weeks probably isn’t hurting its popularity, which might explain its $200-$300 million valuation from venture capital giant Sequoia Capital (Sequoia also invested in Whisper, so they seem to like the anonymous broadcasting market).

Still, you have to wonder how the arrest of the individual that was issuing these threats will threaten Yik Yak’s popularity. After all, what fun (to horrible trolls) is an anonymous app that let’s you say anything (like mass death threats) but still might get you caught?! Who (that isn’t a horrible person) is going to want to use something like that?

The New York TimesWho Spewed That Abuse? Anonymous Yik Yak App Isn’t Telling

By JONATHAN MAHLER
MARCH 8, 2015

During a brief recess in an honors course at Eastern Michigan University last fall, a teaching assistant approached the class’s three female professors. “I think you need to see this,” she said, tapping the icon of a furry yak on her iPhone.

The app opened, and the assistant began scrolling through the feed. While the professors had been lecturing about post-apocalyptic culture, some of the 230 or so freshmen in the auditorium had been having a separate conversation about them on a social media site called Yik Yak. There were dozens of posts, most demeaning, many using crude, sexually explicit language and imagery.

After class, one of the professors, Margaret Crouch, sent off a flurry of emails — with screenshots of some of the worst messages attached — to various university officials, urging them to take some sort of action. “I have been defamed, my reputation besmirched. I have been sexually harassed and verbally abused,” she wrote to her union representative. “I am about ready to hire a lawyer.”

In the end, nothing much came of Ms. Crouch’s efforts, for a simple reason: Yik Yak is anonymous. There was no way for the school to know who was responsible for the posts.

Eastern Michigan is one of a number of universities whose campuses have been roiled by offensive “yaks.” Since the app was introduced a little more than a year ago, it has been used to issue threats of mass violence on more than a dozen college campuses, including the University of North Carolina, Michigan State University and Penn State. Racist, homophobic and misogynist “yaks” have generated controversy at many more, among them Clemson, Emory, Colgate and the University of Texas. At Kenyon College, a “yakker” proposed a gang rape at the school’s women’s center.

In much the same way that Facebook swept through the dorm rooms of America’s college students a decade ago, Yik Yak is now taking their smartphones by storm. Its enormous popularity on campuses has made it the most frequently downloaded anonymous social app in Apple’s App Store, easily surpassing competitors like Whisper and Secret. At times, it has been one of the store’s 10 most downloaded apps.

Like Facebook or Twitter, Yik Yak is a social media network, only without user profiles. It does not sort messages according to friends or followers but by geographic location or, in many cases, by university. Only posts within a 1.5-mile radius appear, making Yik Yak well suited to college campuses. Think of it as a virtual community bulletin board — or maybe a virtual bathroom wall at the student union. It has become the go-to social feed for college students across the country to commiserate about finals, to find a party or to crack a joke about a rival school.

Much of the chatter is harmless. Some of it is not.

“Yik Yak is the Wild West of anonymous social apps,” said Danielle Keats Citron, a law professor at University of Maryland and the author of “Hate Crimes in Cyberspace.” “It is being increasingly used by young people in a really intimidating and destructive way.”

Colleges are largely powerless to deal with the havoc Yik Yak is wreaking. The app’s privacy policy prevents schools from identifying users without a subpoena, court order or search warrant, or an emergency request from a law-enforcement official with a compelling claim of imminent harm. Schools can block access to Yik Yak on their Wi-Fi networks, but banning a popular social media network is controversial in its own right, arguably tantamount to curtailing freedom of speech. And as a practical matter, it doesn’t work anyway. Students can still use the app on their phones with their cell service.

Yik Yak was created in late 2013 by Tyler Droll and Brooks Buffington, fraternity brothers who had recently graduated from Furman University in South Carolina. Mr. Droll majored in information technology and Mr. Buffington in accounting. Both 24, they came up with the idea after realizing that there were only a handful of popular Twitter accounts at Furman, almost all belonging to prominent students, like athletes. With Yik Yak, they say, they hoped to create a more democratic social media network, one where users didn’t need a large number of followers or friends to have their posts read widely.

“We thought, ‘Why can’t we level the playing field and connect everyone?’ ” said Mr. Droll, who withdrew from medical school a week before classes started to focus on the app.

“When we made this app, we really made it for the disenfranchised,” Mr. Buffington added.

…

The Yik Yak app is free. Like many tech start-ups, the company, based in Atlanta, doesn’t generate any revenue. Attracting advertisers could pose a challenge, given the nature of some of the app’s content. For now, though, Mr. Droll and Mr. Buffington are focused on extending Yik Yak’s reach by expanding overseas and moving beyond the college market, much as Facebook did.

Yik Yak’s popularity among college students is part of a broader reaction against more traditional social media sites like Facebook, which can encourage public posturing at the expense of honesty and authenticity.

“Share your thoughts with people around you while keeping your privacy,” Yik Yak’s home page says. It is an attractive concept to a generation of smartphone users who grew up in an era of social media — and are thus inclined to share — but who have also been warned repeatedly about the permanence of their digital footprint.

In a sense, Yik Yak is a descendant of JuicyCampus, an anonymous online college message board that enjoyed a brief period of popularity several years ago. Matt Ivester, who founded JuicyCampus in 2007 and shut it in 2009 after it became a hotbed of gossip and cruelty, is skeptical of the claim that Yik Yak does much more than allow college students to say whatever they want, publicly and with impunity. “You can pretend that it is serving an important role on college campuses, but you can’t pretend that it’s not upsetting a lot of people and doing a lot of damage,” he said. “When I started JuicyCampus, cyberbullying wasn’t even a word in our vernacular. But these guys should know better.”

Yik Yak’s founders say the app’s overnight success left them unprepared for some of the problems that have arisen since its introduction. In response to complaints, they have made some changes to their product, for instance, adding filters to prevent full names from being posted. Certain keywords, like “Jewish,” or “bomb,” prompt this message: “Pump the brakes, this yak may contain threatening language. Now it’s probably nothing and you’re probably an awesome person but just know that Yik Yak and law enforcement take threats seriously. So you tell us, is this yak cool to post?”

In cases involving threats of mass violence, Yik Yak has cooperated with authorities. Most recently, in November, local police traced the source of a yak — “I’m gonna [gun emoji] the school at 12:15 p.m. today” — to a dorm room at Michigan State University. The author, Matthew Mullen, a freshman, was arrested within two hours and pleaded guilty to making a false report or terrorist threat. He was spared jail time but sentenced to two years’ probation and ordered to pay $800 to cover costs connected to the investigation.

In the absence of a specific, actionable threat, though, Yik Yak zealously protects the identities of its users. The responsibility lies with the app’s various communities to police themselves by “upvoting” or “downvoting” posts. If a yak receives a score of negative 5, it is removed. “Really, what it comes down to is that we try to empower the communities as much as we can,” Mr. Droll said.

When Yik Yak appeared, it quickly spread across high schools and middle schools, too, where the problems were even more rampant. After a rash of complaints last winter at a number of schools in Chicago, Mr. Droll and Mr. Buffington disabled the app throughout the city. They say they have since built virtual fences — or “geo-fences” — around about 90 percent of the nation’s high schools and middle schools. Unlike barring Yik Yak from a Wi-Fi network, which has proved ineffective in limiting its use, these fences actually make it impossible to open the app on school grounds. Mr. Droll and Mr. Buffington also changed Yik Yak’s age rating in the App Store from 12 and over to 17 and over.

Toward the end of last school year, almost every student at Phillips Exeter Academy in New Hampshire had the app on his or her phone and checked it constantly to read the anonymous attacks on fellow students, faculty members and deans.

“Please stop using Yik Yak immediately,” Arthur Cosgrove, the dean of residential life, wrote in an email to the student body. “Remove it from your phones. It is doing us no good.”

At Exeter’s request, the company built a geo-fence around the school, but it covered only a few buildings. Students continued using the app on different parts of the sprawling campus.

As we can see, Yik Yak does indeed have identifiable information on its users, it just won’t share it unless there’s a subpoena or compelling claim of imminent harm from law enforcement. So it’s users aren’t actually anonymous. They’re just anonymous to everyone except Yik Yak:

…
Colleges are largely powerless to deal with the havoc Yik Yak is wreaking. The app’s privacy policy prevents schools from identifying users without a subpoena, court order or search warrant, or an emergency request from a law-enforcement official with a compelling claim of imminent harm. Schools can block access to Yik Yak on their Wi-Fi networks, but banning a popular social media network is controversial in its own right, arguably tantamount to curtailing freedom of speech. And as a practical matter, it doesn’t work anyway. Students can still use the app on their phones with their cell service.

…

In cases involving threats of mass violence, Yik Yak has cooperated with authorities. Most recently, in November, local police traced the source of a yak — “I’m gonna [gun emoji] the school at 12:15 p.m. today” — to a dorm room at Michigan State University. The author, Matthew Mullen, a freshman, was arrested within two hours and pleaded guilty to making a false report or terrorist threat. He was spared jail time but sentenced to two years’ probation and ordered to pay $800 to cover costs connected to the investigation.

In the absence of a specific, actionable threat, though, Yik Yak zealously protects the identities of its users. The responsibility lies with the app’s various communities to police themselves by “upvoting” or “downvoting” posts. If a yak receives a score of negative 5, it is removed. “Really, what it comes down to is that we try to empower the communities as much as we can,” Mr. Droll said.

…

And that all raises an interesting question about Yik Yak’s rather questionable business model: Yik Yak was valued at $200-300 million, and yet it’s free, doesn’t generate any revenue, and the only obvious revenue source is advertising which could be tricky since a lot of companies might not want to advertise on a smear-peddling platform known for online harrassment:

…The Yik Yak app is free. Like many tech start-ups, the company, based in Atlanta, doesn’t generate any revenue. Attracting advertisers could pose a challenge, given the nature of some of the app’s content. For now, though, Mr. Droll and Mr. Buffington are focused on extending Yik Yak’s reach by expanding overseas and moving beyond the college market, much as Facebook did.
…

So…since Yik Yak obvious can identify users in an emergency, but simply chooses not to under all other circumstance, you have to wonder if the high valuation for a company that not only isn’t turning a profit but actually has no revenue might have something to do with the fact that large numbers of people are using a service that they assume to be anonymous but is actually able to identify their devices along with user location data. Could that be part of the planned business model? Itseemspossible.

Mark Zuckerberg did not donate $45 billion to charity. You may have heard that, but that was wrong.

Here’s what happened instead: Mr. Zuckerberg created an investment vehicle.

Sorry for the slightly less sexy headline.

Mr. Zuckerberg is a co-founder of Facebook and a youthful mega-billionaire. In announcing the birth of his daughter, he and his wife, Priscilla Chan, declared they would donate 99 percent of their worth, the vast majority of which is tied up in Facebook stock valued at $45 billion today.

In doing so, Mr. Zuckerberg and Ms. Chan did not set up a charitable foundation, which has nonprofit status. He created a limited liability company, one that has already reaped enormous benefits as public relations coup for himself. His P.R. return-on-investment dwarfs that of his Facebook stock. Mr. Zuckerberg was depicted in breathless, glowing terms for having, in essence, moved money from one pocket to the other.

An L.L.C. can invest in for-profit companies (perhaps these will be characterized as societally responsible companies, but lots of companies claim the mantle of societal responsibility). An L.L.C. can make political donations. It can lobby for changes in the law. He remains completely free to do as he wishes with his money. That’s what America is all about. But as a society, we don’t generally call these types of activities “charity.”

What’s more, a charitable foundation is subject to rules and oversight. It has to allocate a certain percentage of its assets every year. The new Zuckerberg L.L.C. won’t be subject to those rules and won’t have any transparency requirements.

Nor did they grapple with the societal implications of the would-be donations.

So what are the tax implications? They are quite generous to Mr. Zuckerberg. I asked Victor Fleischer, a law professor and tax specialist at the University of San Diego School of Law, as well as a contributor to DealBook. He explained that if the L.L.C. sold stock, Mr. Zuckerberg would pay a hefty capital gains tax, particularly if Facebook stock kept climbing.

If the L.L.C. donated to a charity, he would get a deduction just like anyone else. That’s a nice little bonus. But the L.L.C. probably won’t do that because it can do better. The savvier move, Professor Fleischer explained, would be to have the L.L.C. donate the appreciated shares to charity, which would generate a deduction at fair market value of the stock without triggering any tax.

Mr. Zuckerberg didn’t create these tax laws and cannot be criticized for minimizing his tax bills. If he had created a foundation, he would have accrued similar tax benefits. But what this means is that he amassed one of the greatest fortunes in the world — and is likely never to pay any taxes on it. Any time a superwealthy plutocrat makes a charitable donation, the public ought to be reminded that this is how our tax system works. The superwealthy buy great public relations and adulation for donations that minimize their taxes.

Instead of lavishing praise on Mr. Zuckerberg for having issued a news release with a promise, this should be an occasion to mull what kind of society we want to live in. Who should fund our general societal needs and how? Charities rarely fund quotidian yet vital needs. What would $40 billion mean for job creation or infrastructure spending? The Centers for Disease Control and Prevention has a budget of about $7 billion. Maybe more should go to that. Society, through its elected members, taxes its members. Then the elected officials decide what to do with sums of money.

In this case, it is different. One person will be making these decisions.

Of course, nobody thinks our government representatives do a good job of allocating resources. Politicians — a bunch of bums! Maybe Mr. Zuckerberg will make wonderful decisions, ones I would personally be happy with. Maybe not. He blew his $100 million donation to the Newark school system, as Dale Russakoff detailed in her recent book, “The Prize: Who’s in Charge of America’s Schools?” Mr. Zuckerberg has said he has learned from his mistakes. We don’t know whether that’s true because he hasn’t made any decisions with the money he plans to put into his investment vehicle.

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Mega-donations, assuming Mr. Zuckerberg makes good on his pledge, are explicit acknowledgments that the money should be plowed back into society. They are tacit acknowledgments that no one could ever possibly spend $45 billion on himself or his family, and that the money isn’t really “his,” in a fundamental sense. Because that is the case, society can’t rely on the beneficence and enlightenment of the superwealthy to realize this individually. We need to take a portion uniformly — some kind of tax on wealth.

The point is that we are turning into a society of oligarchs. And I am not as excited as some to welcome the new Silicon Valley overlords.

“Any time a superwealthy plutocrat makes a charitable donation, the public ought to be reminded that this is how our tax system works. The superwealthy buy great public relations and adulation for donations that minimize their taxes.”
Yep. And those donations don’t just minimize billionaires’ taxes. They also maximize their influence. It’s also worth reminding our selves that, when it comes to Libertarian oligarchs, what they consider “help” can be pretty harmful. We’ll see which path Zuckerberg takes on his quest to help the masses. We’ll see…

It’s a big help if you’re someone who constantly forgets to send photos around after a party, family event, or night out — and Facebook says there’s no time more popular for picture sharing than the holidays. Instead of making you thumb through your phone’s camera roll, Facebook is now handling the grunt work, recognizing which of your friends are in the frame and letting you share those pictures with a single tap. Photo Magic can be turned off if you get tired of the sharing recommendations or just don’t want Facebook analyzing your pictures.

…

Nice. So now the new facial recognition technology that was previously only available in Australia is getting automatically added to mobile Facebook app users everywhere…except Canada and the EU.

As Facebook Messenger has zoomed to 700 million monthly users, it has become a popular way for people to share photos with your friends. Messenger users collectively send one another 9.5 billion pictures a month, and that number is growing faster than the overall rate of messaging. That led Facebook to consider ways to enhance photo sharing on Messenger — and today it begins to arrive in the form of (deep sigh) Photo Magic, which monitors your camera roll and sends you notifications when it recognizes one or more of your friends asking if you’d like to send it to them. The feature is rolling out in Australia today on Android, with iOS to follow a few days later. It is expected to come to more countries in coming months.

Photo Magic (groan), which you have to opt into to use, is meant to solve a fundamental problem of the smartphone camera age: you likely have hundreds of photos of friends sitting inside your camera roll, and despite your best intentions, you’ll likely never take the time to pick them out and send them to your friends. Peter Martinazzi, a director of product management on Messenger, told me he found himself in this position after Halloween, when his camera roll filled up with photos of his friends in costume. Now, instead of letting them languish, he can use Messenger to get the pictures to their intended recipients.

Here’s how it works. The first time you try the updated app, Messenger will look for the most recent photo in your camera roll that includes one of your Facebook friends. (You’ll have to give it permission to access your photos.) Once it finds a picture, you can send it to the recipient with one tap. If multiple friends are in the photo, it will create a new message thread with you and those friends. The next time you take a picture of one of your Facebook friends, you’ll get a notification suggesting you share it with them.

If this sounds familiar, it’s because it’s the same basic idea as Moments, a stand-alone app that Facebook launched earlier this year. (The Messenger and Moments teams collaborated on Photo Magic, particularly around the face recognition elements.) Moments works the same way, but there’s a catch: friends needs to have Moments installed in order to view the photos you send them. I like Moments a lot, but very few of my friends have it installed — and so I resist sharing photos using Moments, because I don’t want to feel like I’m spamming them with app download links.

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“If this sounds familiar, it’s because it’s the same basic idea as Moments, a stand-alone app that Facebook launched earlier this year. (The Messenger and Moments teams collaborated on Photo Magic, particularly around the face recognition elements.) Moments works the same way, but there’s a catch: friends needs to have Moments installed in order to view the photos you send them. I like Moments a lot, but very few of my friends have it installed — and so I resist sharing photos using Moments, because I don’t want to feel like I’m spamming them with app download links.”

Yep, now that Facebook’s Photo Magic is getting rolled out to most of the world as part of Facebook Messenger , Facebook’s facial recognition technology that scrolls through your smart phone photos can get adopted at a much higher rate since it presumably won’t suffer from the same “we both need to have it” issue that’s holding adoption of Moment back.

Facebook is shutting down photo sync in its mobile apps, and is asking users to try the standalone Moments app instead.

Photo sync arrived on Facebook a few years ago, letting users automatically upload photos from their phones’ camera rolls. Those photos were stored privately by default, and users could then choose which ones to share on the social network.

But on January 10, that feature will go away, TechCrunch reports. Users will have to download Moments if they want to keep syncing their photos, while existing synced photos will appear in the Moments app automatically. Facebook has started showing pop-up notifications and splash pages to alert users to the change. (Users who’d rather not switch will be able to download their synced photos in a zip file and delete them from the network.)

Compared to photo sync, Moments puts a greater emphasis on private sharing. With some help from facial recognition, Facebook users can tag photos of their friends, who can then sync those photos to their own collections. It’s meant to solve the problem of getting a hold of photos you didn’t take, without having to go through email or even Facebook proper.

As TechCrunch points out, Europe’s tighter privacy restrictions on facial recognition have prevented Facebook from releasing Moments there. It’s likely that photo sync will live on in regions where Moments is unavailable.

Why this matters: The focus on Moments puts Facebook in a better position to compete with Google, whose own Google Photos service just added a way to share and sync private albums. Although Google still has the edge in photo quality—users can store full-size or compressed photos, while Facebook reduces all photos to as little as 720 pixels wide—Facebook has the advantage of tying into your existing network of friends. Either way, expect competition to intensify as the two firms fight for private photo sharing dominance.

At least opting out of services that allow third-party mega corporations hell-bent on commercializing as much personal data on all of us as possible scan our smartphone pics is still an option. For now.